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Daily News Roundup: Monday, 6th June 2022

Posted: 6th June 2022


HSBC cuts opening hours at 122 branches

HSBC has cut the opening hours at 122 branches by making temporary Covid-19 reductions permanent, saying changes in customer habits have prompted the change and pointing to a “significant reduction in footfall” since the pandemic. HSBC, which has 441 branches across the UK, said 122 will see opening hours reduced by more than 30%, although 148 branches will see a 30 minute increase. The bank said 163 branches will now open between 9.30am and 4.30pm on weekdays and 9.30am to 1.30pm on Saturday. Santander has also announced plans to reduce opening hours by 90 minutes each day. The changes, set to come in July, mean Santander's branches will operate from 9.30am to 3pm on weekdays, instead of until 4.30pm. Instead of being open from 9.30am to 4pm on Saturdays, branches will operate a half-day service, closing at 12.30pm.

AIB acquires NatWest’s Irish tracker mortgage book

Allied Irish Banks (AIB) will pay NatWest Group €5.4bn to acquire its Irish tracker mortgage book. NatWest announced that it was winding down its Irish Ulster Bank unit 15 months ago and now has binding agreements in place for 90% of a total loan book that stood at about €20bn. AIB said the loans would add 47,000 customers to the bank. The mortgages, which track the European Central Bank interest rate, a product no longer available on the market, will be administered by a third party service provider. AIB has also acquired €3.7bn of Ulster Bank's commercial loans, while Permanent TSB paid €6.4bn and gave NatWest a 16.66% share in the bank in exchange for Ulster's non-tracker mortgage and micro-SME lending books and its asset finance business.

Small building society deals in focus

The Mail says that while those looking for the cheapest mortgage rates and best deals usually end up with one of the big six banks or a major building society, some of the best rates on offer in recent weeks have come from small, local building societies. It highlights deals from the Cambridge, Hanley Economic and Loughborough building societies among some of the best on the market. It goes on to offer guidance to those considering a smaller lender for their mortgage or remortgage. Nicholas Mendes, mortgage technical manager at broker John Charcol, says it is important to note that these deals “will not be around forever” as building societies are not set up to deal with the same number of applications as high street lenders.” He notes that “once they have reached their capacity deals will quickly be withdrawn."


Amundi chief: Parts of private equity ‘like a pyramid scheme’

Vincent Mortier, chief investment officer at Amundi, Europe's biggest asset manager, has voiced concern over elements of the private equity industry. He said: “Some parts of private equity look like a pyramid scheme in a way.” highlighting that firms can sell assets onto peers for a large profit, he added: “That's why you can talk about a Ponzi. It's a circular thing.” Looking at the risks in the sector, Mr Mortier warned: “There are some very, very good opportunities, but there are no miracles. Eventually there will be casualties, but that might not be for three, four, or five years.”


49% of car buyers look to go electric

A survey shows that almost half of drivers in the UK looking to buy a car plan to purchase an electric vehicle. The poll shows that 49% would choose an electric vehicle, up from 21% two years ago. The survey quizzed 18,000 people in 18 countries, including 1,000 drivers in the UK.

FCA US pleads guilty over diesel emission test deception

FCA US, formerly known as Chrysler Group, has pleaded guilty over a scheme to deceive regulators about diesel emission systems on 101,000 trucks. It has agreed to pay a $96.1m fine and give up an additional $203.5m, federal prosecutors said.


Travel industry plea for overseas workers rejected

Grant Shapps has rejected a request by the aviation industry to allow firms to recruit workers from overseas, with the industry having struggled to replace workers who lost their job or left the sector during the pandemic. Companies asked the Transport Secretary for special immigration visas for overseas workers, saying understaffing has led to flight cancellations and delays at airports. Industry bosses reportedly suggested to Mr Shapps that allowing EU workers to fill operational vacancies as the travel sector approaches the peak summer period could help alleviate pressure. While the Government considered changes to the Shortage Occupation List, ministers discounted the idea.


City bonuses hit record levels

Bonuses paid to bankers and other financial sector workers have hit a record high and are rising more than six times faster than average UK wages, according to analysis by unions. The Trades Union Congress (TUC) found that bonuses in the financial and insurance sector grew by 27.9% over the last year. In the same period, average wages grew by just 4.2%. The average bonus awarded in the finance and insurance sector rose to £4,021 in the first three months of this year, up from £3,146 in Q1 2021. The increase of £875 compares to a £98 increase in average monthly pay in the UK. TUC general secretary Frances O'Grady has called for a series of measures, including maximum pay ratios so that bonuses are no more than 10% of total pay; ensuring bonus schemes are open to all staff on the same terms; and making sure workers are included on company pay committees.

Woodford investors sue over fund's collapse

A group of investors have filed a lawsuit over the collapse of Neil Woodford’s equity income fund and the way it was handled by administrators. Law firm Harcus Parker has launched proceedings in the High Court on behalf of 1,500 investors, seeking damages of at least £18m against Link Fund Solutions. The law firm alleges that administrator Link failed to adequately supervise the £3.7bn fund or manage its liquidity. The lawsuit also argues that Link failed to ensure Woodford Equity Income fund’s assets were appropriately valued or provide a prudent spread of risk. Law firm Leigh Day filed a similar case on behalf of an initial 100 claimants last year.

LV boss faces vote of no confidence calls

LV chief executive Mark Hartigan has come under pressure following his abortive attempt to sell the mutual insurer to US private equity firm Bain Capital. More than 1,000 members have written to the Mail on Sunday and the Daily Mail calling for a no-confidence vote in Mr Hartigan at the annual meeting. Despite being the architect of the mooted sale, which failed to win the backing of members, Mr Hartigan remains in his post and was paid more than £1m last year, including a £511,000 bonus. MP Kevin Hollinrake, who sits on Parliament's Treasury Committee, has backed the revolt, saying: “It's high time Mark Hartigan left the company," while Labour MP Gareth Thomas, leader of the Parliamentary All-Party Group on Mutuals, said: “It's time for Mark Hartigan to go.”

FCA appoints interim chair

The Financial Conduct Authority has appointed Richard Lloyd as interim chair. The appointment was announced on February 4 and he has now officially replaced Charles Randell who stood down on May 31 after four years as chair. Mr Lloyd joined the FCA board in April 2019 and has been senior independent director, chair of the board risk committee and chair of the oversight committee. He will act as chair until the Treasury appoints a permanent successor to Mr Randell.

Counsell to step down from TPR

Charles Counsell will be stepping down as chief executive of the Pensions Regulator (TPR) in 2023, having announced that he will not be seeking a second term at the watchdog’s helm.

Adviser submits FCA survey complaint

Peter Meadway, a financial adviser at PM Independent Financial Services, has complained to the Financial Conduct Authority (FCA) over the regulator’s financial resilience survey. The City watchdog has issued seven iterations of the survey following the pandemic. Arguing that the surveys are “a waste of time,” Mr Meadway said: “By all means conduct a survey, but not four times a year. It's unnecessary.”

Just 23% of top finance promotions go to women

Women make up less than a quarter of senior promotions in financial services businesses, new research suggests. A study by the law firm Fox & Partners found that of 5,815 senior level financial service sector promotions last year, 1,365 were women. The previous year, women represented 21%. Fox & Partners warned improving gender diversity will require "significant" cultural changes.


10k pubs and restaurants are at risk of closure

Over 10,000 pubs and restaurants could face closure due to inflation, soaring energy costs and rising rents, according to Kate Nicholls, chief executive of trade body UKHospitality. She said the sector is facing “as big a crisis, if not bigger” than during the pandemic, estimating that 20,000 UKHospitality member businesses are still operating below break-even and 30,000 have no cash reserves. She warned: “I’ve never seen such a toxic cocktail of costs. It is a perfect storm.”


Manufacturing growth slows to seven-month low

Growth across the UK’s manufacturing sector has slowed to a seven-month low, with businesses pointing to weaker demand, fewer exports, supply chain issues and rising costs, as well as the war in Ukraine. The S&P Global/CIPS UK Manufacturing PMI hit 54.6 in May, down from 55.8 in April on an index where a figure above 50 represents growth. While the expansion of the manufacturing sector slowed, it still notched up its 24th consecutive month of growth. Rob Dobson, director at S&P Global Market Intelligence, said: “Household demand slumped in response to the ongoing cost-of-living crisis … With both input costs and selling prices rising at rates close to April’s peaks, the surveys suggest that there is no sign of the inflationary surge abating any time soon.”

Kwarteng considers aid for manufacturers

Business Secretary Kwasi Kwarteng is considering a support package for steelmakers and other manufacturers struggling to cope with rising energy costs. He is reportedly looking into whether the Government could exempt heavy industrial manufacturers from network charges which are included in bills to help to maintain and upgrade Britain’s network of gas pipes and electricity cables. While UK steelmakers benefit from incentives for using the electricity network at off-peak times, Ofgem is planning to reduce those incentives as it looks to even out the charges for industrial and domestic users.


House prices climb 11.2% but growth slows

Property values increased by 11.2% in the year to the end of May, according to Nationwide, taking the average to £269,914. The increase marks a slowdown on the 12.1% growth recorded in April. Robert Gardner of Nationwide expects the housing market to slow as the year progresses, saying: “Household finances are likely to remain under pressure with inflation set to reach double digits in the coming quarters if global energy prices remain high. Measures of consumer confidence have already fallen towards record lows.”

House prices up 13,972% during Queen’s reign

Analysis shows that house prices have climbed by 13,972% during the Queen’s reign. In 1952, the average UK house cost £1,891, according to Nationwide, while the current average is £260,771. The average house price is still 4.3 times higher in real terms than it was in 1952. Adjusting for inflation, the average 1952 house was worth £61,000. In the year the Queen took to the throne, just 32% of households owned their own home, compared with 65% today.


Jubilee set to give retail and hospitality a £6bn boost

The Jubilee weekend is expected to deliver a £6bn-plus boost to high streets and hospitality businesses. Research suggests that Britons are expected to spend more than £2bn on food and drink supplies, while pubs, bars and restaurants are hoping to see almost £3bn in sales. Analysts at shopper monitoring group Springboard say the long weekend is expected to prompt an 8% rise in visitors to retail destinations in the week up to the bank holiday weekend. In a joint statement, trade organisations including UKHospitality said: “At last, our beleaguered sector is able to look forward to the sort of trading period that will give it a massive boost as it sets out on the long road to post-pandemic recovery.”

Frasers Group snaps up Missguided

Sports Direct owner Frasers Group has bought online fashion retailer Missguided for £20m. Missguided, which had been hit by supply chain problems, rising freight costs and increasing competition, collapsed into administration earlier this week. Frasers Group confirmed it had bought the intellectual property of Missguided and its sister brand Mennace. Retailers Boohoo, Asos and JD Sports were among those rumoured to be interested in a potential rescue deal before Frasers Group stepped in.


Davies: Central banks could have done more to contain inflationary pressures

Sir Howard Davies, the chairman of NatWest and a former deputy governor of the Bank of England (BoE), believes central banks could have done more to contain inflationary pressures which emerged as Covid-19 lockdowns eased. He said that the BoE could have raised rates earlier and eased back on quantitative easing (QE). Sir Howard said: “For central banks to say, ‘we’re powerless’, is not really a good message.” He accepted that most of the inflationary pressure “is from forces that are outside the Bank of England’s control,” but said there was an element “which does relate to very rapid increases in the money supply, which were driven by very low interest rates and by massive QE.”

Bank of England urged to raise interest rate by 3%

Andrew Sentance, a former member of the Bank of England’s Monetary Policy Committee (MPC), says the Bank needs to raise its interest rates by 3% if it wants to stop soaring inflation. He said that if he were still a rate-setter, he would be looking to raise the interest rate to “at least 2% by the autumn and to about 3% by next spring.” Mr Sentance, senior adviser at Cambridge Econometrics, said this would be “relatively mild monetary policy action, given the prospect of 10% inflation later this year.” He added that the move would be a “much more appropriate response to current inflation risks than the MPC’s recent approach of gingerly and unconvincingly edging up UK interest rates.”

Inflation may have peaked, says economist

Economist Julian Jessop believes that inflation will peak sooner and fall faster than previously expected, saying it is likely to fall back to the Bank of England’s target level by 2023. He says the supply-side pressures that have contributed to surging inflation may be fading. "I am now ready to stick my neck out again and predict that the consumer price measure of inflation has already peaked, at around 9%,” He says, adding: “By the middle of next year, it should be back down close to the 2% target again."

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