BANKING
Consumers warned ahead of new anti-fraud measures
Anti-fraud rules coming into force next week could see shoppers who have failed to update their contact details finding their transactions are declined. From March 14th, more checks, such as a text or call to a mobile, will be required for certain payments. The checks fall under new Strong Customer Authentication (SCA) rules, which aim to help stop fraud. UK Finance says SCA will be required for almost all online purchases under £25. Multiple low-value payments could also prompt a request for verification. Customers may also be able to add sellers to a “trusted beneficiary” list in future, meaning they won’t need to go through SCA when buying from that organisation. However, many providers, such as Royal Bank of Scotland, NatWest, Santander and Nationwide, have said they will not be offering this.
UK anti-fraud minister attacks ‘Dad’s Army’ Covid loan recovery
Former counter-fraud minister Lord Theodore Agnew has derided government attempts to stop fraud in its Covid loan scheme as a “Dad’s Army operation” and warned that the Treasury now faces an “avalanche” of claims from banks over the government guarantees in the flagship £47bn bounce back loans scheme (BBLS). “These are going to start hitting the Treasury in industrial quantities in the next few weeks,” he told the House of Commons Treasury select committee. Unfortunately, state guarantees mean it will likely be difficult to persuade banks to take greater responsibility for tracking down fraudsters, Lord Agnew added, although lenders had a moral duty to do so.
INTERNATIONAL
BNP Paribas has €3bn exposure to Russia, Ukraine
BNP Paribas has said it had a total exposure of around €3bn to Russia and Ukraine, which it said was relatively limited, adding that it stands by its previously announced 2025 financial targets. The French bank said: "The gross exposures off- and on-balance sheet on Ukraine and Russia are limited,” adding that in Ukraine they amounted 0.09% of the group’s total commitments, or about €1.7bn, on December 31 and in Russia amounted to 0.07%, or about €1.3bn. Separately, UniCredit said that a full write-off of its Russian business would cost around €7.4bn. The Italian bank said the worst-case scenario would knock two percentage points off its capital ratio, but nonetheless confirmed its cash dividends and plans
for a share buyback. Deutsche Bank, meanwhile, said its exposure to financial markets in Russia and Ukraine was very limited.
Russia on brink of credit default, warns Fitch
Russia’s sovereign debt has been downgraded from B to C by Fitch, placing it in a “near default” category. A default would cost Pimco billions of dollars as the California-based asset manager has bet at least $1bn that Russia would pay its creditors while also holding $1.5bn of its sovereign debt. Jennifer McKeown, of Capital Economics, said that although Russia’s limited international debt obligations mean “losses by foreign investors in Russia look manageable”, because “the aggregate data conceal large exposures by individual institutions” contagion remains a possibility, with vulnerabilities greatest in Europe.
Biden orders study into digital dollar
US President Joe Biden signed an executive order on Wednesday instructing the federal government to step up its research the development of a Central Bank Digital Currency (CBDC) and explore regulations around the broader use of cryptocurrencies. “We’re placing the highest urgency on the effort to assess the potential benefits and the risks of a digital dollar on payment systems, on financial stability, on national security, on the implications for human rights, and financial inclusion,” a senior administration official told reporters. Bitcoin rose nearly 10% in midday trading Wednesday on the news.
Israeli banks report profit increases
One of Israel's biggest lenders Bank Leumi has reported a jump in fourth-quarter profit and said it would pay a sizable dividend. Net profit in the period reached 1.47bn shekels ($446m), compared with 890m in the same period last year, the bank said. The bank’s board approved paying a dividend of 588m shekels, representing 40% of quarterly profit. Meanwhile, Bank Hapoalim, Leumi's main rival, reported a rise in fourth-quarter profit but held off on paying dividends for the quarter, sending its shares lower. Leumi’s net interest income rose to 2.55bn shekels from 2.22bn. The bank recorded income for credit losses of 83m shekels after setting aside provisions for loan losses of 270m a year earlier.
Berlin blocks efforts to ban Russia from Swift
Germany is resisting a push to exclude the Russian state-backed lender Sberbank from the Swift payments system. Berlin fears that locking Russia’s biggest lender out of Swift would leave Germany unable to pay for its gas purchases from Russia. Swift is governed by EU law so Europe must approve any decision to eject Russia. Meanwhile, Russia's second largest bank VTB Bank has begun offering a Chinese yuan savings account, with other Russian banks looking to follow suit.
Ukraine war prompts investor rethink of ESG and the defence sector
Sweden’s SEB bank has U-turned on a policy banning defence stocks from its funds less than a year after it was adopted - the latest sign that war has prompted European banks to tear up their sustainability policies. In the UK, Sir Nigel Wilson, chief executive of Legal & General, insisted that "defence is something you
need to have" following government fears that a trend for ethical
investing is making it harder for the industry to raise capital.
Citigroup ‘running out of options’ in push to sell Russian bank
Citigroup may have to abandon its planned sale of its Russian retail bank following Moscow’s invasion of Ukraine, leading to a costly writedown, dealmakers and sanctions experts said.
Credit Suisse under investor pressure on fossil fuel finance
Activist groups including ShareAction and the Ethos Foundation are calling on Credit Suisse to cut its fossil fuel exposure, just as a new report shows slow progress on tackling climate change among European companies.
FINANCIAL SERVICES
Regulators alert as shorting rocks LME
The Financial Conduct Authority, Prudential Regulation Authority and Ofgem are closely monitoring volatility in global commodity markets amid concerns over wider financial stability. Ole Hansen, head of commodity strategy at Saxo Bank, said: "Suddenly producers who have been hedging ... have increasingly been caught out with futures exchanges demanding more and more collateral to prevent their short positions from being stopped out.” The heightened oversight follows the London Metal Exchange’s move to suspend nickel trading after its price doubled briefly to above $100,000 a tonne. It is thought escalating margin calls threatened to bankrupt some of the exchange’s members. The price of gold and silver rose again on the back of rising industrial metals.
UK stewardship code adds 74 new signatories
A further 74 new signatories have signed up to the Financial Reporting Council’s UK Stewardship Code, including State Street Global Advisors, Goldman Sachs, Morgan Stanley, Pimco, Schroders and T Rowe Price. The Code requires asset managers, asset owners and service providers that are signed up to demonstrate to investors how they engage with companies to hold them to account. They must also explain their approach to integrating ESG factors into investment decisions. Financial News notes that the FRC’s updated list of signatories shows Columbia Threadneedle, Northern Trust, and JPMorgan Asset Management have still not signed up.
LEISURE & HOSPITALITY
Virgin leisure arm mulls sale
The majority shareholder in Virgin Experience Days has hired advisers to consider the possibility of a sale or stock market listing. Virgin Experience Days, which sells hot air balloon flights and escape room challenges, has been owned by Inflexion Private Equity since 2017.
MANUFACTURING
Soaring energy and metal prices threaten manufacturers
Manufacturers are calling on the Government to provide more support to industry as record energy and metal prices stress suppliers to the defence and automotive sectors. SME manufacturers questioned by the Manufacturing Growth Programme said supply chain support and longer-term assistance were key to their survival.
MEDIA & ENTERTAINMENT
Banks review relationship with telecoms group linked to Mikhail Fridman
International lenders are reviewing their relationship with Dutch telecoms group Veon, after the owner of its largest shareholder and one of Russia’s richest men, Mikhail Fridman, was hit with sanctions by the EU. Fridman and fellow billionaire Petr Aven stepped down from Luxembourg-based investment firm LetterOne last week and three more Russian billionaires have since resigned from the group. Citigroup, ING and JPMorgan are among the lenders reviewing facilities provided to Veon and its subsidiaries.
ECONOMY
Pay soars on candidate shortage
Research by the Recruitment and Employment Confederation (REC) has found pay increases are being fuelled by intense competition for workers. Salaries for temp pay also increased, said the report, based on a survey of 400 recruitment agencies. REC chief executive Neil Carberry said: “Candidate availability has now been dropping for a year, which shows the scale of the labour shortage the UK faces.”
Nearly 40% of Brits think BoE inflation prediction optimistic
A survey by HR software provider CIPHR found 39% of respondents believe inflation will hit 8% or higher - exceeding the Bank of England’s prediction of a 7% spike in the spring. Almost a third of those people felt it would top 10%, and one in 11 said it might even spike at 15%.
OTHER
SEC considers cyber disclosure requirements
The Securities and Exchange Commission is weighing a proposal to mandate reporting for companies around cybersecurity. “Cybersecurity incidents, unfortunately, happen a lot,” SEC Chair Gary Gensler said in prepared remarks, noting that successful attacks affect companies' finances, operations and reputations. “Thus, investors increasingly seek information about cybersecurity risks, which can affect their investment decisions and returns.”