Santander and NatWest write to millions of vulnerable customers
Santander has contacted more than a million customers who may be at risk of falling behind with bills as the cost-of-living squeeze bites. The bank has singled out personal account holders who are spending a large part of their income on energy or using credit cards to take out cash or to pay for essential bills. It has also been in touch with about 150,000 business customers and every company that took out a Bounce Back Loan during the pandemic that has not been repaid, directing them to the Government's Pay as You Grow repayment scheme. The move comes after NatWest contacted low income account holders amid concern over how the cost of living crisis was impacting people. The Mail on Sunday notes that Lloyds Banking Group's chief executive Charlie Nunn recently said that about 1% of customers, or 260,000 people, were “struggling to make ends meet.” The bank revealed it had consolidated the debts of 51,000 customers into a single more manageable loan.
NCA accused of failing to act on document forgery by banks
Kevin Hollinrake, a member of the Commons' Treasury select committee, along with Anthony Stansfeld , the former police and crime commissioner for Thames Valley, have called on the National Crime Agency to come clean on its failure to properly investigate claims of document tampering and signature forgery by Britain's banks. A dossier compiled by Julian Watts, a former management consultant, alleges hundreds of cases of banks using forged documents in disputes with small business. But Mr Stansfield says the NCA have failed to investigate the vast majority over 700 well-documented cases of banks using forged documentation to defraud customers and have yet to hold anyone to account. Hollinrake adds: “There has been woeful lack of proactivity from the NCA, particularly given my regular correspondences and meetings with the director-general, Graeme Biggar, which stressed the concerns we have about document manipulation by a number of banks.”
UK funds responsible for 70% of ‘dog funds’
Investments managed by HBOS, Fidelity and Jupiter have been branded some of the worst-performing in the UK, with billions of pounds languishing in their so-called dog funds. According to a twice-yearly list compiled by Bestinvest, three products offered by Lloyds Banking Group brands HBOS and Scottish Widows account for 62% of the total £10.7bn sitting in underperforming funds. Jupiter Asset Management has three funds on the list, down from six in the previous instalment. However, none of the three funds on this list were on the earlier one, which Bestinvest said is “worrying for a group that has built its reputation on skilful stock picking”. The amount held by the dog funds is an improvement compared with six months ago, when there was £45.4bn held in 86 dog funds.
Hampden & Co unveils key director hiring
Hampden & Co has hired Gill Sanders from Adam & Co as a director at the Edinburgh-based private bank. Ms Sanders will provide clients with a “bespoke” banking service including deposits, borrowing and day-to-day banking. Chief executive Graeme Hartop said: “The private banking market is changing and we are attracting many new clients who value our relationship-driven approach. As we grow to meet the banking needs of these clients across the UK, we are adding experience to our team while also developing talented people.”
UK’s government investment fund largely backed ‘zombie businesses’
The UK’s COVID-19 investment vehicle, the Future Fund, invested in nearly 1,200 companies. But minutes of a British Business Bank audit committee reveal most of them had a limited chance of success.
Bank of England accused of failures on shadow banking
Paul Tucker, a former Bank of England deputy governor, has accused the BoE of inadequate regulation of the shadow banking sector and called for policies to properly tackle its associated risks.
Private equity units at buyout firms contract as financial markets tumble
A sharp slide in financial markets and a slowing of new investment from institutional investors is leading to a contraction in assets under management at some of the most prominent private equity firms.
Morgan Stanley reaches agreements to resolve record-keeping probes
Morgan Stanley agreed to pay the U.S. Securities and Exchange Commission $125m and the Commodity Futures Trading Commission $75m to resolve probes into employee communications on messaging platforms that had not been approved by the company. The bank had already set aside $200m in its Q2 earnings to prepare for the penalty. Separately, Bank of America earmarked about $200m for unauthorized electronic messaging by its employees, while Citigroup and Barclays also put aside cash to cover similar expected fines.
Russia bans Western investors from selling stakes in banking, energy
Russia has banned investors from countries that have imposed sanctions on the country from selling shares in key energy projects and banks until the end of the year. President Vladimir Putin could issue a special waiver in certain cases for deals to go ahead, a decree published on Friday said, and the government and the central bank should prepare a list of banks for the Kremlin's approval.
US banks tout fossil fuel credentials after Republican ESG backlash
After a slew of banks were banned from West Virginia for working against the energy industry, and as Florida prepares a new anti-woke investment law, some US lenders are now brandishing their fossil fuel financing.
SEC crypto clampdown puts digital asset industry on notice
A piece in the FT details how the Securities and Exchange Commission is being forced to police the crypto space using pre-existing rules in traditional finance while large swaths of the market remain unregulated.
LSE boss: No silver bullet to boosting City appeal
The chief executive of the London Stock Exchange Group has warned that there was no single solution for bolstering London’s competitiveness as an investment destination. The reforms to City rules that have been proposed so far, such as relaxing Britain’s free-float requirements, promoting fintech, or allowing private investors to participate in all types of fundraisings, are productive, David Schwimmer says. But he doesn’t “see any one change or any one shift as the silver bullet.” Schwimmer explains that he would like to see a higher level of retail participation across the UK markets. “We think that would be healthy for the markets. We think that would be healthy for the real economy,” he adds.
Hargreaves Lansdown hit by falling markets and consumer confidence
UK-listed investment platform Hargreaves Lansdown has reported a 9% fall in assets under administration to £123.8bn in the year to the end of June. New business flows were down 37% compared with the previous year while profits before tax fell more than a quarter to £269.2m, but still beat analysts’ estimates. CEO Chris Hill pointed out that last year had been the firm’s highest-ever level of new business inflows and the situation had now normalised. The results also confirmed a new range of HL funds will be launched, boosting the "overall proposition and competitiveness" of its offering while driving inflows. The firm also revealed it had appointed Richard Caldicott from M&G Wealth to lead its expanding financial advice offering. Shares rose 7% on Friday.
Growing numbers sign up to on-demand pay services
The Times reports a surge in demand for services which give workers an advance on their pay. The number of employers signing up for "on-demand pay services" has leapt with the client base at Wagestream, one of the biggest providers, doubling to more than 300 employers in the past year. Just under a million workers had access to its app at the end of 2021, but that has grown to more than 2.5m. Requests for Revolut’s salary advance service have doubled since November and there has been a significant increase in monthly active users.
Berkshire Hathaway posts $44bn loss
Berkshire Hathaway recorded a $43.8bn loss in the three months to June, down from a profit of $28.1bn last year. Its portfolio value was dragged down by share prices falls at three of its major holdings – Apple, Bank of America and American Express. Despite this, Warren Buffet’s investment company recorded a 39% rise in operating profit to $9.3bn. The conglomerate’s insurance businesses were boosted by rising interest rates, and the stronger US dollar increased profits in its European and Japanese debt investments.
Mitsui Sumitomo Insurance to buy Transverse for $400m
Mitsui Sumitomo Insurance Company, a subsidiary of Japan's MS&AD Insurance Group Holdings, is to buy U.S. reinsurance broker Transverse for $400m. It may pay up to an additional $150m, depending on the U.S. company's earnings after the deal. It is thought the Japanese property insurer aims to gain know-how of the reinsurance broker business with the expectation of growth in areas of risk such as cyberattacks.
Pimco hit by €29bn outflows as bond market turns
California-based investment manager Pimco lost €29bn in net outflows in the second quarter. This comes after €14bn was pulled by investors in the first quarter amid a sweeping sell-off in the bond market.
Blockade of Taiwan would trigger global chip shortage
The chief executive of Intel Europe has warned that rising tensions between the US and China over Taiwan threaten to trigger significant shortages of electronics. If Taiwan’s chipmaking exports are cut off by Beijing, the industry could be plunged into a major crisis, Frans Scheper said. He told the Telegraph: “If you think about mobile phones, 80-90% of chips are coming from Asia, from that specific area. For certain applications it would have a huge impact. Maybe for others a little bit less, but there are not always alternative sources available.” If China imposed a blockade on Taiwan, the global economic disruption would be huge, says Mark Williams, chief Asia economist at Capital Economics. “The prospect that this supply could be disrupted or severed in the near future would trigger panic buying and stockpiling.”
MEDIA & ENTERTAINMENT
Uncertainty weighs on WPP’s positive results
Shares in WPP fell on Friday amid fears about the outlook for marketing spending as recession fears loom. This was despite the advertising giant reporting first half net revenue up 8.9% higher year-on-year, far outpacing the 5.5% that City analysts had forecast. “We haven’t seen any sign yet of clients pulling back spending, but we are mindful of the overall macro environment,” Mark Read WPP’s chief executive, said. “Clients continue to spend. While consumer demand remains strong, clients are still investing in marketing.”
House prices start to fall as rising costs take their toll
House prices have fallen for the first time in a year as the cost of living crisis and higher interest rates start to impact the property market. Figures released by the Halifax on Friday show average house prices in the UK fell by 0.1% month-on-month in July - a £365 fall in cash terms. The annual rate of growth slowed from 12.5% to 11.8% between June and July. The average home now costs £293,221 after hitting a record high of £293,586 in June. Russell Galley, of Halifax, said: “Leading indicators of the housing market have recently shown a softening of activity, while rising borrowing costs are adding to the squeeze on household budgets against a backdrop of exceptionally high house price-to-income ratios.” Wales recorded the strongest house price inflation of any British region or nation, with annual growth of 14.7%, taking the average cost of a home to £222,639. In England, homes in the South West had the largest rises, with growth of 14.3% to hit an average price of £310,846.
Ashley sues Morgan Stanley over forced share sale
Sports Direct founder Mike Ashley is pursuing a legal claim against Morgan Stanley after the investment bank indirectly forced his company, Frasers, to transfer Hugo Boss stock options. Court documents claim the imposed margin call on the shares cost Frasers money and was based on the incorrect assumption that Frasers would behave as an activist to agitate for changes at Hugo Boss. Denmark's Saxo Bank, an intermediary through which Frasers built its stake in Hugo Boss, has also been listed as a defendant.
Next moves in on struggling lifestyle retailer Joules
Next is in detailed negotiations about buying a 25% shareholding in Joules, which has seen its shares collapse during the last year, Sky News reports. Last month, Joules hired advisors to assist with efforts to improve "profitability, cash generation and liquidity headroom". It subsequently said it had agreed an extension to banking facilities with its principal lender, Barclays, that would place restrictions on its ability to pay dividends.
BoE could be ordered to scrap inflation target as Governor defends policy
Bank of England Governor Andrew Bailey has denied claims he was “asleep at the wheel” amid widespread dismay over surging inflation and calls for him to resign. The Bank said on Thursday that inflation will soon pass 13% - 11% above its own target and predicted a year-long recession. Both Attorney General Suella Braverman and the Business Secretary, Kwasi Kwarteng, have said rates should have been raised sooner. Mr Kwarteng told Sky News: “There is an argument - and I think it's a strong one - to say that inflation was an issue that was identified at the beginning of last year.” But Mr Bailey claimed on BBC Radio 4 that there were few voices calling for rate rises two years ago and insisted he would not resign until his term ends in 2028. Commenting, Christopher Snowdon of the Institute of Economic Affairs, said: “If my only job was keeping inflation at 2% but inflation was 9% and I expected it to rise to 13%, I'd like to think I would have the decency to resign, even if I was earning £575,000 a year.” Meanwhile, the BoE’s 2% inflation target could be abandoned altogether under radical plans being floated by allies of Tory leadership frontrunner Liz Truss. The Monetary Policy Committee may be ordered to target nominal GDP instead, meaning the Bank would adjust interest rates to control the amount of spending in the economy, rather than inflation itself.
Nine in 10 adults cut spending as cost of living rises
A new Office for National Statistics (ONS) survey has revealed that nine in 10 adults, or 46m people, are worse off because of rising bills. Some 28m are already spending less in shops and online, 24m are cutting back on electricity and gas use and 16m are spending less on food. The research also found that 11m are raiding their savings to get by and 7m have taken out loans to cope with the dramatic rise in inflation. Lower-income households and those living in more deprived areas in the UK are being hit the hardest, while significantly more disabled people have been forced to buy less food and essential items, such as utilities or medication, than non-disabled people, the ONS said. Tom Marsland, policy manager at Scope, said: “These stark findings show millions have already had to cut back, with disabled people hardest hit – even before October’s terrifying energy price hikes have come into force.”