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Daily News Roundup: Monday, 6th December 2021

Posted: 6th December 2021

BANKING

Crosbie becomes Nationwide's first female CEO

Debbie Crosbie, CEO of TSB, is to become chief executive at Nationwide Building Society, replacing Joe Garner, who has held the position for six years. Ms Crosbie becomes the first female CEO in Nationwide’s 175-year history. She will start at the country’s second-largest mortgage lender in the first half of next year. While Nationwide did not disclose Ms Crosbie's pay, it is expected to be in line with the £1.2m Mr Garner currently receives annually. Incoming chairman Kevin Parry said Ms Crosbie “emerged as the outstanding candidate” following a “thorough and rigorous” selection process. He added: “She is a strong advocate of mutuality and supports Nationwide’s core purpose and the societal role it plays.”

Lloyds shifts to growth mode ending years of retrenchment

The FT says Lloyds Banking Group CEO Charlie Nunn is set to focus a £4bn “war chest” on delivering growth, expanding the banks ambitions in property, wealth, commercial and investment banking.

Santander accused of age discrimination over security measures

Santander customers have accused the bank of age discrimination after being told they must own a mobile phone to verify certain transactions. This has raised concern over access to services for older savers, with it shown that just under half of older people do not use a smartphone and many do not have reliable home internet or mobile coverage. Barclays, HSBC, Lloyds, RBS and TSB all allow customers to use other methods to confirm their identity, including receiving a call from the bank, or using a reader.

TSB could be set for sale

The Mail on Sunday reports that TSB is set to be put up for sale next year. Spain's Sabadell, which bought TSB for £1.7bn in 2015, is expected to trigger a formal sale process in the first half of next year after closing branches and cutting costs. It is understood Co-op Bank is still interested in acquiring TSB, having made a £1bn bid in October.

Co-op CEO: Profit and takeovers on the horizon

Co-operative Bank chief executive Nick Slape says it is on track to generate a full-year profit. The bank has been buoyed by a surge in mortgage borrowing fuelled by the stamp duty holiday. Mr Slape says Co-op Bank is looking for takeovers, having made a £1bn play for TSB in October.

PRIVATE EQUITY

CVC eyes float

The Sunday Times reveals that private equity firm CVC, which has $125bn in assets under management, is understood to be working on a stock market listing with Goldman Sachs. The paper says that US private equity firms were first to break with tradition by selling shares to the public, with Blackstone and KKR leading the way, while TPG appointed Goldman Sachs and JPMorgan to help it consider a listing in August. Bridgepoint has seen its shares rise by 35% since it listed in July, while shares in EQT, which floated in New York and Stockholm in 2019, are up more than six-fold.

INTERNATIONAL

Citigroup applies for China securities license

US bank Citigroup has applied for a securities license in China. It recently submitted its application to the China Securities and Regulatory Commission and is also applying for a futures license in the coming months.

FINANCIAL SERVICES

Ministers urged to give FCA powers over crypto ads

Financial experts have urged ministers to grant the Financial Conduct Authority (FCA) powers to control adverts for high-risk cryptocurrencies, arguing that a wave of ads across billboards, the sides of buses and Tube platforms are luring people into buying what is often an untested, unregulated and volatile product. Former MP Oonagh McDonald, who has just written a book on cryptocurrencies and regulation, said: “If the Government is serious about robust consumer protection, then it needs to act quickly on this issue.” She added that crypto adverts “must be more transparent”, saying they “must also categorically state – in words people can easily read – that they are not FCA authorised if that is indeed the case.” Susannah Streeter, an analyst at wealth platform Hargreaves Lansdown, commented: “Most firms advertising and selling investments in the crypto Wild West are not regulated. This means that if you invest you will not have the protection of the Financial Services Compensation Scheme if things go wrong.” Connor Campbell of personal finance website NerdWallet added: “From an advertising perspective, more needs to be done to shield younger, inexperienced investors from the high risks associated with cryptocurrencies.” It is noted that the Advertising Standards Authority has described crypto assets as a “key priority” area.

LV investors call on FCA to scrutinise Bain takeover deal

The Financial Conduct Authority (FCA) has been urged to safeguard LV members in the wake of a £530m takeover by Bain Capital, with the City watchdog urged to ensure their funds are properly protected. The UK Shareholders’ Association has written to FCA chairman Charles Randell, voicing fears that a “with-profits” fund could be used to prop up the business if the Bain-owned business ran into financial difficulty. The letter came as two LV policyholders hired legal firm Leigh Day to ask the FCA to postpone a vote on the deal while concerns are addressed. The FCA said: “Our role, under law, is to ensure that customers are treated fairly and that there is no material adverse impact on them should the transaction go ahead. We have challenged the firm to make sure this happens.”

Credit Agricole Assurances takes 49% of Edison's green business

Credit Agricole Assurances has agreed to buy a 49% stake in the renewables business of Italian energy group Edison. The deal values the unit at more than €2bn.

Trading apps look to lure young investors

The Telegraph examines AJ Bell’s launch of new a commission-free service aimed at enticing a new generation of traders into the stock market. Dodl will charge users an annual fee of 0.15% of the value of a portfolio and there will be no commission for buying and selling investments. In comparison, Hargreaves Lansdown and Interactive Investor charge dealing fees per trade of £11.95 and £7.99 respectively. Julian Roberts, an analyst at Jefferies, thinks AJ Bell’s move to attract a new generation of investors makes sense.

Pester in the fintech loop

Former TSB chief executive Paul Pester has teamed up with co-investors including Metro Bank and Atom Bank founder Anthony Thomson to launch Loop, a social networking app enabling friends and family members to share money. City sources say Loop, which is planning to launch nationally early next year, has raised a round of seed funding and is now preparing for a larger Series A fundraising to take place in early 2022.

HEALTHCARE

Boots could be sold for more than £5bn

Walgreens Boots Alliance is considering a sale of UK high street pharmacy Boots. The US retail giant is expected to instruct Goldman Sachs to review options for the business, which could include a sale that values the chain at more than £5bn. Alternatively, Boots could be floated on the stock exchange.

AstraZeneca thwarts Sobi takeover

AstraZeneca has blocked the £5.7bn private equity takeover of Swedish pharmaceuticals group Sobi. The drug-maker, which owns 8% of Sobi's shares, refused to back the offer from Advent International and Singapore's sovereign wealth fund. While 87% of shareholder votes were in favour of the bid, this fell short of the 90% needed to wave the deal through.

REAL ESTATE

Bank looks to loosen home loan rules

Bank of England officials are understood to be considering loosening mortgage lending rules introduced in the wake of the financial crisis. The Bank is looking at easing affordability checks for borrowers as part of a review of the market restrictions. One measure being considered would see a reduction in the additional interest rate charge used to test borrowers’ ability to pay the reversion rate after an initial deal ends. This would benefit first-time buyers, with rules designed to protect them against high interest rates having made it harder for some potential homeowners. Andrew Wishart, housing economist at Capital Economics, said loosening the affordability test increases the chances of large increases in house prices, “which would start to make us worry about the housing market entering bubble territory.” He added: “It would help perpetuate very strong demand that might take prices to an unsustainable level.” 

Mortgage scheme sees underwhelming uptake

Data on the Government's flagship mortgage guarantee scheme for borrowers with small deposits shows uptake has been slow. The scheme, which was announced in the March Budget and offers state-backed 5% deposit mortgages, was used in just 812 deals between mid-April and the end of June. Treasury figures show that purchases utilising the support scheme accounted for just 0.7% of all residential mortgage completions in the period. Of those who used the scheme, only 666 were first-time buyers. The scheme, which runs until December 2022, was rolled out as the number of first-time buyer loans fell during the pandemic. It enables buyers to purchase homes worth up to £600,000 with a 5% deposit, with banks including Lloyds, Santander and Barclays among those signed up. Banks will be covered for a share of losses if borrowers default.

RETAIL

JD Sports worth £11.2bn

JD Sports is now Britain's second-most valuable retail group after Tesco, at a stock market valuation of £11.2bn.

SPORT

La Liga rivals propose alternative to CVC investment

Spanish football rivals Real Madrid and Barcelona, alongside Athletic Bilbao, have proposed a €2bn bank credit to finance the country's La Liga, with this an alternative to a cash injection offered by CVC. Under the proposal, JPMorgan, Bank of America and HSBC would jointly lend the cash in exchange for an fixed annual payment of €115m for 25 years. The CVC deal would see the fund receive 11% of the league's television rights over the next 50 years.

ECONOMY

Credit card rates hit new high

Campaigners have called for new legal caps on credit card interest rates, which have hit their highest levels for more than two decades. Bank of England figures reveal the average annual interest rates offered on credit cards has risen to 21.49%, with this the highest average credit card rate since December 1998. Michael Donald, a former director of Visa UK and founder of the digital payment app ImageNPay, says it is hard for the financial industry to justify interest rates of above 20% when the base rate is at a historic low of 0.1%. Joe Cox, a senior policy adviser at the Jubilee Debt Campaign, has urged ministers to impose the same financial restrictions on the credit card firms as on the providers of payday loans. UK Finance said pricing decisions “are a matter for individual card providers”, while a Financial Conduct Authority said the watchdog’s rules “are helping tackle problem credit card debt.” Consumers in the UK owe about £57.9bn on their credit cards, equivalent to about £2,080 per household, according to Bank of England data.

Saunders: Bank should gauge Omicron impact before rate rethink

Bank of England policymaker Michael Saunders believes the Bank would benefit from waiting to see the impact of the Omicron coronavirus variant before raising interest rates. Mr Saunders, a member of the Monetary Policy Committee, said: "The pace, and scale, of any monetary policy changes will depend on economic developments and the outlook". He also warned that waiting too long to lift rates could also be “costly”, leaving inflation unchecked and requiring a “more abrupt and painful policy tightening later.” Looking ahead, Mr Saunders said it is likely that any rise in the interest rate “will be limited given that the neutral level of interest rates remains low.” “Provided we do not delay too long, it should be a case of easing off the accelerator rather than applying the brakes,” he added.

CBI cuts growth forecasts

The Confederation of British Industry (CBI) has cut growth forecasts for next year, saying concerns about rising costs, shortages and the possibility of more coronavirus restrictions may hinder Britain's economic recovery. CBI economists are predicting 6.9% growth in GDP this year and 5.1% in 2022, down from its June forecasts of 8.2% and 6.1%, respectively.

OTHER

Experts warn over soaring personal inflation

Experts have warned that amid a climate of climbing inflation, some households may be seeing prices climb far higher than official inflation figures suggest. With inflation at a decade-long high of 4.2% and the Bank of England predicting it could hit 5% in early 2022, it has been noted that for some people, the surge in prices will be far steeper. While the Office for National Statistics collates the prices of 700 everyday items and services to come up with the Consumer Prices Index (CPI), the rate masks the broad variation in price rises among different items and services. Rob Burgeman of wealth manager Brewin Dolphin says: “I think some people currently have a personal inflation rate of several times the average CPI figure. They are likely to be those on low incomes as they spend money on the basics and not on things coming down in price like technology.” Doug Brodie, director of retirement income specialist adviser Chancery Lane, believes that personal inflation rates vary depending on individual lifestyles, while wealth managers Rathbone Investment Management and St James's Place say their wealthiest clients have particularly high rates of personal inflation.

Miles nominated to OBR

Chancellor Rishi Sunak has nominated former Bank of England interest rate-setter David Miles to join the Office for Budget Responsibility, the country's fiscal watchdog and forecaster. If approved by the Treasury Committee, Mr Miles will start a five-year term in the role on January 1, replacing Charles Bean.

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