FCA warns banks of Russian cyber attacks
The Financial Conduct Authority has told banks to stress test their cyber defences, warning of a heightened risk of attack if a Russian invasion in Ukraine leads to strict financial sanctions. The FCA confirmed in a statement it has been in touch with UK lenders to shore up security systems. “As you’d expect, we’re contacting firms to highlight the National Cyber Security Centre’s statement that organisations should bolster their cyber security resilience,” the regulator said. Meanwhile, European banks are weighing their exposure to Russia as the risk of new sanctions looms. Cutting Russia off from SWIFT could amount to a catastrophic debt forgiveness program, some experts say, and long-term the creation of a parallel payments system.
Banks withdraw 1% mortgage deals
Analysts at Moneyfacts have found that sub-1% fixed rate mortgages have disappeared from the market since last week's rate rise. The current cheapest two-year fixed rate now costs 1.39%. Katie Brain at Defaqto, said: "I can't imagine lenders will be introducing deals with rates that low again for a good while. If borrowers aren't at the best rate they can possibly get, they need to consider why. Because rates are only going to go up from here."
SEC seeks to bolster disclosure rules for private equity and hedge funds
The US Securities and Exchange Commission is seeking to compel hedge funds and private equity groups to disclose quarterly performance and fees charged to investors as part of a crackdown on activities that are against the public interest. “Private fund advisers, through the funds they manage, touch so much of our economy,” SEC chair Gary Gensler said. “Thus, it’s worth asking whether we can promote more efficiency, competition, and transparency in this field.” Some of the proposals are likely to meet with “vigorous advocacy from the industry”, says Adam Kanter, a partner at Mayer Brown, who adds that the commission is “targeting somewhat common practices”. The Wall Street Journal cites Drew Maloney, president of the American Investment Council, who says: “We are concerned that these new regulations are unnecessary and will not strengthen pension returns or help companies innovate and compete in a global marketplace.” But the FT’s editorial board backs the proposals, arguing that they “are needed not only to make markets function better in the technical sense, but also to increase the public’s faith in market capitalism.”
Credit Suisse paid scant attention to compliance in race to win rich clients, court hears
A money laundering case against Credit Suisse heard on Wednesday from a co-defendant describing how the bank spent more time instructing her on how to dress and behave with clients than on compliance. Credit Suisse is accused of helping launder millions on behalf of a Bulgarian cocaine-smuggling cartel, claims the bank “unreservedly rejects”. Separately, top investors in Credit Suisse have told the bank they will oppose any attempt to extend the tenure of vice-chair Severin
Schwan amid growing pressure on the lender to rebuild its reputation.
UniCredit offloads bad loans
UniCredit is looking to sell around €2bn ($2.29bn) in impaired debts to bad loan specialist Prelios after the Italian bank halted a process to hire a debt recovery firm for the portfolio. A sale would lower UniCredit's impaired loans close to 3.1% of total lending, compared with 3.6% at the end of December when they totalled €16bn.
Handelsbanken reports record Q4 profit
Handelsbanken reported record results on Wednesday. The Swedish banking group announced a rise in fourth-quarter operating earnings to 6.37bn crowns ($697.43m) from 5.38bn in the same period a year earlier. Handelsbanken said net credit losses narrowed to virtually zero while spending rose slightly.
ABN Amro announces €500m share buyback
ABN Amro has announced plans for a €500m share buyback as the bank looks to improve returns for shareholders. The Dutch bank reported higher-than-expected net profit of €552m for the fourth quarter, helped by economic recovery and the sale of its head office.
Judge rules $500m UBS claim can be heard in London
A lawsuit brought by exiled Chinese businessman against UBS can be heard in London, the English High Court has ruled. Guo Wengui claims advice from the bank cost him almost his entire investment in Chinese brokerage Haitong.
FCA criticised for failing to deter botched LV= takeover
The Financial Conduct Authority has come under fire over its position on LV= which was forced to abandon a planned sale to Bain Capital. LV=’s management claimed it needed to seal a deal in order to survive, but it had already raised £1.1bn from selling its general insurance arm to Allianz in 2020. The regulator said it would not object to a sale or demutualisation. Since the Bain bid fell through, LV= has rejected an offer from Royal London and has rowed back on claims it was in financial trouble. Professor of accounting Lord Sikka said: “There is clearly an endemic problem at the FCA. We need to see what evidence was provided by LV that showed the mutual could not survive as a stand-alone entity. This saga raises fresh questions about the FCA and clearly more reform is needed.” Kevin Hollinrake MP said: “The FCA is getting it wrong time and time again. It needs to be more interventionist.” The Mail’s Alex Brummer describes the about turn by LV= management as “one of the most farcical boardroom U-turns in living memory”.
Fidelity’s index fund business Geode hits $1tn in assets
Fidelity’s passive investment business Geode Capital Management grew assets under management to $1trn last year, up from $719bn on the previous year, a testament to the approach to index funds under Abigail Johnson.
Australia’s largest pension fund to pour £23bn into UK and Europe
Australia’s largest pension scheme, AustralianSuper, plans to invest £23bn in the UK and Europe over the next five years, with a particular focus on real estate, infrastructure and direct private credit.
Digital payments group Adyen reports 70% jump in transaction volumes
Dutch payments group Adyen reported a 70% jump in transactions last year. Full-year net revenue rose 46% year on year to €1bn in 2021, prompting shares to rise 10% on Wednesday.
Amundi surges past €2tn in assets under management
Amundi’s acquisition of exchange traded funds business Lyxor, combined with strong inflows, saw AUM exceed €2tn for the first time. Net income increased 13.9% year on year in Q4 to €328m.
GSK vows ‘step change' in growth
GlaxoSmithKline boss Emma Walmsley has promised a “step change” in performance at the drug maker amid ongoing pressure from activist investor Elliot Management. Walmsley said that 2022 would bring the “biggest change in Glaxo’s recent corporate history” with the spin-off of its consumer healthcare business on the London Stock Exchange. Elliott and Bluebell Capital Partners, a smaller activist investor in GSK, have both encouraged it to consider a sale of the business, but Walmsley insisted the group was fully focussed on the demerger with the “aim to unlock the potential of both GSK and consumer healthcare, strengthen GSK’s balance sheet and maximise value for all shareholders.”
Residential rents rise at fastest pace in 13 years
A quarterly survey of by property website Zoopla reveals that the cost of renting a property is rising at its fastest pace in 13 years with the average UK tenant facing a bill of nearly £1,000 a month. Rents rose by an annual 8.3% in the last quarter of 2021 as demand soared and supply remains tight. "The flooding of rental demand back into city centres thanks to office workers, students and international demand returning to cities means the post-pandemic recalibration of the rental market is well underway," said Grainne Gilmore, head of research at Zoopla. Supply has also been constrained by landlords leaving the sector as a result of tax and regulatory changes and because renters are staying put as house price growth stymies plans to buy.
Retailers drop suppliers over ESG failings
A report from Barclays Corporate Banking reveals that 21% of UK retailers have cut ties with suppliers in the last year because they were not meeting required ESG standards. The most common reasons for cancelling contracts were the use of unsustainable materials, unfair working hours and lack of membership of a trade body that monitors ethical and sustainability standards.
Amazon designated a grocer by CMA in regulatory crackdown
The Competition and Markets Authority has designated Amazon as a grocer, forcing the tech giant to adhere to a code of practice that prevents supermarkets from squeezing their suppliers.
BoE chief economist cautions against ‘aggressive’ approach to rate rises
Huw Pill, the Bank of England’s chief economist, has argued for a gradual approach to rate rises adding that he had voted last week for the 0.25% hike to 0.5% rather than a steeper increase partly because he did not want interest rate policy to be seen as "foot to the floor" on the accelerator. He went on to warn that future monetary policy depended on how “pragmatic and realistic” companies and households were about higher prices. "The longer that firms try to maintain real profit margins and employees try to maintain real wages, the more likely it is that domestically-generated inflation will achieve its own self-sustaining momentum even as the external impulse to UK inflation recedes," Mr Pill said.