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Daily News Roundup: Thursday, 11th February 2021

Posted: 11th February 2021

BANKING

Bailey: EU may refuse access for the City

Andrew Bailey has warned that Brussels may well prevent UK finance from access to the EU banking market in a move the Bank of England Governor said would lead to fragmented markets and higher costs for consumers. The cost of mortgages, currency exchange and insurance would all rise, the Telegraph says. Mr Bailey said the EU would be making a mistake if it locked Britain out adding: “I cannot really tell you where the EU is going to come out on this, but I’m afraid a world in which the EU dictates and determines what rules and standards we have in the UK is not going to work. We have to state the argument for why it is important to have global standards, global markets and safe openness. If we all sign up to that, then there isn't a need to go in that direction." Separately, Shearman & Sterling partner Barnabas Reynolds explains in City AM why, since the UK has left the EU, it is time that we re-set the legal framework of the UK’s financial services.

Bank fraud linked to online dating scams rises 20% during lockdown

UK Finance recorded a 20% increase in bank transfer fraud linked to romance scams between January and November 2020, compared with a year earlier, the Independent reports. The total value of these scams increased by 12% annually to £18.5m between January and November 2020, with victims losing £7,850 on average.

Brazier steps down from BoE role

Alex Brazier, the Bank of England’s executive director for financial stability strategy, is stepping down to take a career break. Brazier said: “Throughout my career, I've been very lucky to have worked with such an incredibly talented group of people, including closely with three Governors. But after more than 20 years at the Bank, I am excited to be taking the opportunity to seek new challenges and broaden my career.”

PRIVATE EQUITY

BlackRock vehicle close to acquisition

BlackRock's Long Term Private Capital (LTPC) vehicle is in advanced talks to buy Aquila Heywood, a pensions software provider, for around £350m. If completed, it would be the third acquisition made by the LPTC fund, which closed an IPO last month after raising nearly $3.5bn.

INTERNATIONAL

Former Labour MP hired by JP Morgan

Former Labour MP Chuka Umunna has been hired to lead JP Morgan’s European environmental, social and governance (ESG) operations. The Telegraph notes that, “despite having previously worked in the City himself - at JP Morgan, Credit Suisse and Herbert Smith Freehills - Mr Umunna kept bankers on their toes while he was a Labour MP. He fought against ‘reckless’ remuneration at banks which he said encouraged risky behaviour and wrote to Barclays in 2011 demanding a breakdown of what tax it had paid.” JP Morgan declined to comment on Mr Umunna’s remuneration.

MPS/UniCredit: Draghi and Orcel go toe to toe

The FT’s Lex suggests if Mario Draghi becomes Italy’s next prime minister, one of his first tasks will be sorting out the loss-making Monte dei Paschi, possibly by helping to arrange a takeover by UniCredit. Former UBS investment banker Andrea Orcel will lead UniCredit from April; the bank just posted a €1.18bn quarterly loss but net profit for the full year of 2020 was €1.3bn.

SocGen falls to first full-year loss in decades as pandemic takes toll

Société Générale has reported its first full-year loss in decades for last year, with its share price down 42% over the past 12 months.

AIB to axe 1,500 and quit Britain

AIB has begun a formal consultation with unions over plans to cease activities in Great Britain and shed up to 1,500 staff.

AUTOMOTIVE

Toyota shrugs off global chip shortage with higher sales target

Toyota’s full-year profit guidance has been raised to 54%, with the firm forecasting an operating profit of ¥2tn ($19bn) for the fiscal year ending in March.

AVIATION

Boeing's 777X airliner won’t land until 2024

Boeing's new airliner, the 777X, was due in June 2020 but the company has now said it hopes to begin deliveries at the end of 2023.

CONSTRUCTION

Developers hit with new taxes to pay for unsafe cladding removal

The Housing Secretary has announced two new taxes levied on property developers designed to help the Government pay for the removal of unsafe cladding from high rise buildings post-Grenfell. The move by Robert Jenrick sent shares in major UK property developers down yesterday.

Persimmon makes provision for cladding repairs

Persimmon has announced that an interim dividend of 70p per share would be paid in December, while also noting that it had made a £75m provision in its 2020 results to fund the removal or investigation of dangerous cladding at 26 high-rise buildings in its portfolio.

Redrow reports record first half sales

Record first half sales of £1bn have been reported by housebuilder Redrow, with revenue increasing 20% and pre-tax profit up 11% to £174m.

FINANCIAL SERVICES

Fund manager Amundi reports record profit as CEO steps down

Yves Perrier, CEO at Amundi, is to step down after over a decade, and will be succeeded by his deputy Valérie Baudson. This comes after the firm reported a quarterly net income of €288m, an increase of 5.1% on the year earlier period, while full-year income was down 4.7% to €962m. The company noted that earnings had almost doubled since its initial 2015 public offering. Meanwhile overall inflows were €14.4bn in the fourth quarter, with asset management up by 4.4% to €1.7bn at the end of last year.

Insurers should not expect capital reduction after Brexit

Anna Sweeney, the Bank of England’s executive director for insurance, told a Westminster Business Forum conference that insurers should not expect a loosening of rules on capital requirements after Brexit just because Solvency II rules are under review. Sweeney said the principles of Solvency II would be upheld and insurers holding more capital may be “part of the answer” to meeting a £1.7bn bill for COVID-19 claims.

Amsterdam ousts London as Europe’s top share trading hub

London has lost its historic position as the main hub for share trading in Europe since Brussels refused to grant equivalency to UK exchanges and trading venues, with Amsterdam scooping up most of the business.

HEALTHCARE

UK in talks with UAE to back life sciences fund

The British life sciences industry could be boosted by hundreds of millions of pounds in a deal UK ministers are reportedly negotiating with a United Arab Emirates sovereign wealth fund.

LEISURE AND ENTERTAINMENT

Heineken to cut 8,000 jobs as pandemic hits brewer

Heineken is to cut 8,000 jobs and seek €2bn of savings over two years as new chief executive Dolf van den Brink reshapes the world’s second-largest brewer for a post-pandemic era. About a fifth of jobs at the brewer’s headquarters are set to be eliminated in the first quarter of this year. Mr van den Brink explained his strategic plan would aim to improve Heineken’s digital operations, and broaden its product range beyond beer, while improving profit margins from 12.3% to 17%.

MANUFACTURING

Dividend payment rises at Smurfit Kappa Group

Smurfit Kappa Group (SKG)’s final dividend has been increased to 8%, after reporting revenue of €8.5bn for its 2020 financial year. The firm’s profit before income tax was €748m, down 10% on the €1.06bn seen in 2019.

MEDIA & ENTERTAINMENT

Google follows Facebook into news licensing

Google has signed a licensing deal with over 120 publications in the UK, with publishers to be paid for news excerpts that appear in the firm’s search results.

DTI Digital bought by WPP

Digital innovation and software engineering firm DTI Digital has been acquired by creative transformation company WPP.

REAL ESTATE

London first-time house buyer prices down

Rightmove data show that the average price for a property purchased by first-time buyers in London has fallen by 1.4% over the last 12 months to £474,950.

RETAIL

Dunelm Group resumes dividend on higher H1 profit

Dunelm Group reinstated its interim dividend and reported a higher first-half profit yesterday, as online demand surged and more people stuck at home shopped for its products to refurbish their living spaces. The company’s pre-tax profit rose 34.4% to £112.4m in the 26 weeks to December 26 compared with the £112m it had forecast last month. Consequently, it will pay an interim dividend of 12 pence per share and said the final dividend will be decided in due course.

ECONOMY

Brexit hit to London could top £9.5bn without financial services deal

Analysis of the Government’s Brexit trade deal by the Centre for Economics and Business Research has suggested that London may lose up to £9.5bn in economic output a year from Brexit. The situation could also worsen if a post-Brexit deal on financial services does not materialise. The Mayor of London Sadiq Khan said of the CEBR’s prediction for London: “Whichever way you slice it, the Government’s Brexit trade deal was the equivalent of a ‘no deal’ Brexit for financial and professional services, and our businesses now face a costly red tape mountain caused by the UK having to trade with the EU as a ‘third country'”.

OTHER

Petro-states could lose $13trn in revenue by 2041

A new report from the think-tank Carbon Tracker says that oil and gas producing countries face a multi-trillion-dollar hole in their revenue as efforts to contain the rise in global temperatures drive the decarbonisation of energy supplies. It estimates the cumulative total revenue loss for all oil-producing countries by 2040 will be $13trn. A group of 40 countries Carbon Tracker describes as "petrostates" could suffer an average loss of 46% of oil and gas revenue. The report says diversification - of government revenue and national economies - is an urgent task.

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