BANKING
Expat customers to lose accounts
British expatriates living in the EU must find alternative arrangements for their pensions, mortgages and savings before banks close their British accounts at the end of the year. UK financial services lost “passporting” rights to operate in the EU because of Brexit, meaning they can no longer legally serve customers on the Continent unless they obtain banking licences from individual member states. However, many lenders have calculated it is easier to cut ties with customers that cannot provide a UK address. About 1.3m British citizens live in EU member states. While they are likely to have a bank account in the country in which they live, many expats rely on a UK bank account to receive money in sterling, such as from a private pension or income from renting out British property. Lloyds Bank, Halifax and Bank of Scotland are not closing accounts, but are not accepting non-UK based customers either.
£1.1bn of BBLS cash flagged as suspected fraud
Reuters reports that yet-to-be-published Government data will show that around £1.1bn of small business loans made under Bounce Back Loan Scheme (BBLS) have been classified as suspected fraud. The Government's current central estimate for bounce back loan fraud is for 7.5% of the total lent. In addition to the suspected fraud, banks have claimed £2.6bn worth of government guarantees for loans that were in default, up from £1.6bn in March this year, according to a source with knowledge of the matter. A further £1.2bn worth of such claims have been paid out, against £350m of claims as of March 31. Department for Business, Energy and Industry data shared by the unnamed source shows that £28.3bn worth of loans are being repaid on schedule, while a further £4.7bn of the total has been fully repaid.
Borrowers lured by security of five-year mortgages
Brokers are reporting a surge in homeowners seeking out five-year mortgages as a growing number of lenders offer cheaper loans if borrowers agree to lock in for longer. Nationwide, HSBC, and Halifax are all offering rates between 3.59% and 3.41% on five-year deals – nearly 0.5% lower than their two-year deals. But brokers warn rates could fall early next year if inflation eases or if the country enters a recession, leaving those looking to escape their five-year deals with hefty exit fees.
UK banks pile into buy now, pay later in battle with fintechs
A number of banks are turning to buy now, pay later products in a bid to compete with fintech challengers, despite rising risks of default and increasing scrutiny from regulators.
Shawbrook’s £2bn sale shelved over inflation fears and weak markets
BC Partners and Pollen Street Capital have cancelled plans to sell UK challenger bank Shawbrook after their hopes of attracting bids worth about £2bn failed to materialise.
INTERNATIONAL
Russian banks see huge losses amid sanctions clampdown
Russian banks lost a combined 1.5trn roubles ($25bn) in H1 in the wake of western sanctions shutting them out of crucial parts of the global financial system. Dmitry Tulin, first deputy chairman of Russia's central bank, said around two-thirds of the losses came from foreign currency operations, with lenders blocked from trading in dollars, euros and other currencies. Unprofitable banks racked up a combined 1.9trn rouble loss, while profitable lenders earned a combined 400bn roubles.
UBS scraps $1.4bn Wealthfront takeover
UBS and US robo-adviser Wealthfront have mutually agreed to terminate their $1.4bn tie-up just over eight months after announcing the deal. The Swiss bank said it is committed to its plan of growing in the US and will continue to build its digital wealth management offering. Wealthfront CEO David Fortunato said: “We are continuing to explore ways to work together in a partnership.”
FINANCIAL SERVICES
Peltz investment vehicle winds itself up
Activist investor Nelson Peltz’s London-listed investment vehicle is winding itself up. Trian Investors I, which owns £420m of shares in a number of businesses, is to close because a large number of investors want to exit. The fund is handing investors shares in the businesses it backs, rather than cash, allowing shareholders flexibility to sell-down or hold onto the investments once the fund is shut down. Mr Peltz has come under pressure after two asset managers in which he owns big stakes called for an overhaul of Trian's board, with Janus Henderson and Invesco flagging governance concerns.
Treasury demands crypto exchanges report suspected sanction breaches
The Treasury’s Office of Financial Sanctions Implementation has issued updated guidance notifying crypto exchanges that they must report suspected sanctions breaches to UK authorities. The move comes amid concerns that bitcoin and other cryptoassets are being used to circumvent restrictions imposed in response to Russia’s invasion of Ukraine.
HEALTHCARE
Pharma bosses face being struck off
The Competition and Markets Authority (CMA) has sought to strike off the bosses of four pharmaceutical firms due to misconduct. The competition watchdog has issued proceedings in the High Court to disqualify seven directors from across Alliance Pharma, Lexon, Medreich and Advanz-owned Focus. This follows an investigation into alleged breaches of the law within the pharmaceutical sector which was launched in October 2017. The CMA earlier this year fined five firms more than £35m for colluding to restrict the supply of an anti-nausea tablet that sent costs to the NHS up by 700%. Alliance, Lexon, Advanz and Cinven have each filed appeals at the Competition Appeal Tribunal against the CMA’s decision.
LEISURE & HOSPITALITY
Pilots sue over ‘hidden’ changes to sick pay
Holiday firm Tui has been accused of misleading pilots over changes to sick pay and benefits that resulted in some staff on long-term leave taking big cuts to their income. Eight pilots on sick leave are suing the airline for unspecified damages after a new sick pay plan approved by staff in 2021 left them with an abrupt cut in monthly payments and reduced contributions to their pension pots. A spokeswoman for the firm said: “Tui Airways are disappointed by the claim made by our valued colleagues. We worked closely with their trade union to mutually agree changes which were implemented following a lawful consultation process.”
MANUFACTURING
Factories consider shutdowns as gas costs climb
With gas prices likely to climb after Russia turned off a key pipeline, manufacturers are planning to cut back on production to save costs. This comes with firms facing rises in gas and electricity bills of up to 600%. Trevor Sikorski, head of natural gas at consultancy Energy Aspects, predicts prices will surge by as much as 50%, while Goldman Sachs analysts have predicted gas prices will see a “significant rally from Monday, potentially mimicking the August highs.” While Britain gets just 4% of gas through the Nord Stream 1 pipeline, the importance of its supply to Germany means it affects the overall price on the wholesale gas markets. Companies in energy-intensive industries may look to “load shifting” - moving production to hours when electricity is cheaper, such as late evening and overnight. Stephen Elliott, chief executive of the Chemicals Industry Association, said that producers facing four-fold increases in energy bills would have to start looking at cutting production, while Alasdair McDiarmid of the steelworkers’ union Community said: “If the crisis continues it will have a significant impact on the security of jobs.”
MEDIA & ENTERTAINMENT
Truphone acquisition probe extended
The Government has extended a national security probe into the fire-sale of Truphone, a mobile phone technology provider. Department for Business, Energy and Industrial Strategy (BEIS) officials are to take up to 45 additional working days to scrutinise the purchase of Truphone assets by German technology entrepreneur Hakan Koc. The extension, which prohibits the sale from being completed, has been ordered by the BEIS’ Investment Security Unit under the National Security and Investment Act. Truphone, a mobile virtual network operator which focuses on international corporate clients such as investment banks, holds a remote SIM provisioning contract with BT Group, with this said to have triggered potential concerns in relation to the takeover.
REAL ESTATE
HSBC: Dip in demand will see house prices fall
Analysts at HSBC believe the UK is “on the cusp of a housing downturn”, pointing to the impact of the sharp rise in mortgage rates. Affordability pressures will mean a “significant fall in housing demand,” the experts warn, saying that there will be a 20% reduction in demand for houses over the next 12 months. They forecast that prices outside of central London will fall by 7.5%. For central London, where affordability is far more stretched than elsewhere in Britain, HSBC is predicting a 15% fall in home values.
ECONOMY
Former MPC member calls for interest rate cuts
Danny Blanchflower, a former member of the Bank of England’s Monetary Policy Committee, warns that with the cost of borrowing soaring, the Bank of England is “foolishly” making matters worse by increasing rates, arguing that rate cuts “will have to come soon.” Writing for the Standard, he says: “Fast action is what is needed now to prevent freefall.” Mr Blanchflower says recently announced energy price rises should be immediately reversed, noting that this “may involve taking the energy companies over at least temporarily.” Warning that households who cannot pay for energy, food, their rent or mortgages will stop spending on everything else, he says there will be a significant knock-on effect on the retail, leisure and hospitality sectors. “Many companies will fail. It is likely that millions of jobs will be lost. Mortgage repossessions and tenant evictions will increase,” he warns, urging the Government to deliver financial support and “pay for it by borrowing as it did with Covid.”
OTHER
Lloyds: Nine in ten payments now contactless
Figures from Lloyds Bank show a surge in the use of contactless debit card payments, with this method used in 87% of transactions in 2022 compared to 65% in June 2019. The pandemic and the lockdown restrictions it brought have contributed to the rise, as has the higher contactless limit, which increased from £30 to £100 in October last year. The data shows that 93% of restaurant transactions are made in contactless, while between 85%-80% of supermarket, hardware and clothing purchases see cards preferred to cash. Lloyds says 800,000 debit card customers have set their own contactless spending limits, with 60% opting for a limit below £50.