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Daily News Roundup: Thursday, 11th March 2021

Posted: 11th March 2021

BANKING

HSBC to phase out financing for coal

ShareAction has withdrawn a resolution on HSBC’s commitment to the environment after the bank tabled a shareholder vote on plans to phase out coal financing by 2040. ShareAction led a group including Amundi and Man Group to apply pressure on HSBC to reduce the loans and underwriting services offered to clients that rely heavily on fossil fuels within a timeline consistent with Paris climate goals. The new special resolution will commit HSBC to phasing out financing for coal-fired power and thermal coal mining across the EU and OECD by 2030 and across the world by 2040. Jeanne Martin, campaign manager at ShareAction, said the announcement “sets an important precedent for the banking industry.”

There is a way to keep the UK at the top of global finance

Andrew Large lays out a strategy for the City post-Brexit: a focus on wholesale finance, London’s historic strengths, and acknowledging that for EU retail banking we’ll have to stick to their rules.

PRIVATE EQUITY

Passion Capital in new fund launch

Passion Capital, an early backer of Monzo is launching its third fund, which is targeted at “high net worth” or “sophisticated” investors. Eileen Burbidge, Passion Capital partner and former Tech Nation chair stated: “Investment into a private venture fund is usually reserved for institutions. We are throwing our doors open to a much wider range of investors in this unique collaboration with Seedrs as we look to diversify our investor base and increase access for investors who might be interested in partnering with us.”

Stampede for Silicon Valley start-ups sees VCs invest at fast pace

Venture capitalists have undertaken a flurry of dealmaking ploughing more than $460bn into private start-ups this year, intensifying competition and increasing concerns about inflated valuations.

INTERNATIONAL

Summer internships will be in-person, Goldman Sachs says

Goldman Sachs has told those interns set to join in the summer that they will be working at the office in contrast with the majority of its investment bank rivals who have said they will stick with virtual programmes, at least initially. However, Goldman said the plans could change depending on COVID-19 infection rates. The move comes after the bank’s CEO David Solomon described working from home as an “aberration” and “not a new normal.” Separately, the bank has pledged $10bn over ten years to support black women as part of its "One Million Black Women" initiative.

Alexander Schütz to leave Deutsche Bank supervisory board

Deutsche Bank’s supervisory board has parted company with Austrian financier Alexander Schütz who was publicly rebuked earlier this year by the lender over communications he had with Wirecard.

Banks adopt new debt terms to avoid payment mishaps

US banks are inserting new terms in to legal documents to protect themselves from accidental fund transfers following Citigroup’s $900m payment debacle last year.

AVIATION

GE to sell aircraft leasing business to AerCap in $30bn deal

Irish firm AerCap is to acquire General Electric’s aircraft-leasing business in a deal valued at more than $30bn, bringing together the two biggest companies in the market.

CONSTRUCTION

Balfour Beatty sees book size grow

Balfour Beatty is increasing its share buyback scheme to £150m in an attempt to boost its share price. The construction company will also repay the £19m it claimed under the Government’s job retention scheme, with the firm releasing a statement saying: “For 2022 and beyond, the strength of the group’s order book and positive infrastructure markets creates the capacity to drive profitable managed growth and sustainable cash generation.” Meanwhile, brick and concrete firm Ibstock reported that revenue fell 23% to £316m last year.

FINANCIAL SERVICES

Taulia steers Greensill clients elsewhere

Fintech firm Taulia has secured $6bn (£4.3bn) in funding from banks including JP Morgan allowing it to help Greensill Capital customers affected by its collapse to shore up their liquidity. Taulia provided Greensill with a software platform and is now referring borrowers to JP Morgan and others. The move puts a rescue deal between Greensill and US private equity firm Apollo in jeopardy. Apollo had offered around $60m for Greensill’s IT and intellectual property, court documents show. Separately, Credit Suisse has removed three executives at the centre of the crisis surrounding its Greensill-backed supply-chain finance funds while the Telegraph reports of impending fights between institutional investors and trade credit insurers over losses incurred by Greensill’s collapse.

LME to upgrade electronic systems

The London Metal Exchange has said it will move to improve the market’s electronic trading system after observing positive results during the pandemic. The bourse said in January that the time was right to close its iconic trading ring and move to an electronic pricing structure, with LME chief executive Matthew Chamberlain now saying, “electronic pricing has served the market well, with consistently high volumes of activity in the pricing window, easily observable by all stakeholders, and more participants with direct access.” He added: “Given the data, and our industry’s continued move towards digitisation and greater transparency, we believe it is now time to consider the long-term future of pricing at the LME.”

FCA apologises for mistakes

The Financial Conduct Authority has said it is “profoundly sorry” for mistakes in the handling of recent scandals that have had a devastating impact on investors who lost millions of pounds. Addressing a virtual conference organised by trade association Pimfa, Debbie Gupta, the FCA’s Head of Life Insurance and Advice, said the regulator needed to change its approach to the consumer investment market. Meanwhile, Lord Myners, the former City minister, accused the government and regulators of failing to heed warnings he and others had made about the "potential systemic risk" posed by Greensill Capital.

UK payments firm mulls US Spac listing

London-based Worldremit is considering a listing in the US through a merger with a US special purpose acquisition company (Spac), according to market sources. If the rumours are true it will add further pressure to regulators in the UK to make it easier for Spacs to list in London. Meanwhile, Richard Branson is backing another Spac - Virgin Group Acquisition Corp III – which is looking to raise as much as $500m to target companies in the travel and leisure, financial services and health and wellness sectors.

L&G profits hit by pandemic

Legal & General has reported that profits for the year fell 12% to £1.8bn as the coronavirus crisis hit the company’s insurance and housebuilding operations. Boss Nigel Wilson stated: “London is the best City in the world, but we have got to promote it. It needs to work hard to get back on track,” as the firm revealed plans for major investment in technology and renewables companies.

Quilter reports results after Lighthouse acquisition

Quilter has reported that profit before tax for the year ended 31 December 2020 was £168m, down from £182m in the year earlier period. Meanwhile assets under management and administration (AuMA) increased 7% to £117.8bn. Chief executive Paul Feeney said the firm “had not only come through the year well but also strategically and operationally stronger,” while its integration of another company, Lighthouse, is “largely complete.”

ESG/BlackRock: greenwash should no longer wash in investment

The FT’s Lex says is time for regulators to police the green claims of fund managers as tightly as their projections on investment returns. The paper runs a Big Read piece on greenwashing following the introduction of new rules by the EU that make any asset manager that wants to market their fund as a sustainable product subject to tough disclosure requirements.

F&C focuses on environmental practices

Investment trust F&C has announced a new focus on green credentials, with head Paul Niven stating: “We see great opportunity for shareholder returns to be enhanced through a focus on companies engaging in sustainable business practices.”

LEISURE & HOSPITALITY

Deliveroo readies for float

Deliveroo is preparing to list in London with a valuation of between £7bn and £8bn. Underlying gross profit at the firm was up 89.5% to £358m last year, compared to £189m in 2019, while underlying losses for the year were £223.7m, compared to £317m in 2019. Meanwhile, rival Just Eat Takeaway.com saw revenues up 54% to €2.4bn in 2020, with pre-tax losses increasing 67% to €147m.

Restaurant Group in £175m fundraising

The Restaurant Group has announced plans to raise £175m, with the proceeds to be used to prepare for any resurgence of the pandemic, expand its Wagamama chain and Brunning & Price pubs arm, and reduce its debt.

MANUFACTURING

Brexit knocks revenues at third of manufacturers

Since Britain left the EU in January more than a third of manufacturers have lost revenue according to Make UK, heightening worries over border delays and red tape. Separately, Brussels will make UK food manufacturers producing multi-ingredient products fill out new health assessment forms from April 21st, adding extra costs to exporting to the EU.

MEDIA & ENTERTAINMENT

Trio of watchdogs reveal digital super-regulator’s programme

A new group formed by Ofcom, the Competition Markets Authority (CMA) and the Information Commissioner’s Office has released its first plan for new regulation across online and digital services. The Digital Regulation Cooperation Forum (DCRF) will act as a channel through which each watchdog can cooperate with online regulation and, over the course of the next year, focus on three priority areas: responding strategically to industry and technological developments; joined-up regulatory approaches; and building skills and capabilities.

Disney streaming service reaches 100m milestone

Disney executive chairman Bob Iger could be named US ambassador to Britain after he steps down later this year, as the firm’s Disney Plus streaming service confirmed it had reached 100m users. Chief executive Bob Chapek noted that the company was focusing on investment in new content, targeting the release of 100 new titles annually.

PROFESSIONAL SERVICES

McKinsey elects Bob Sternfels as next leader of crisis-hit partnership

Bob Sternfels has been elected as the new boss of McKinsey’s with partners picking the San Francisco-based 51-year-old over Sven Smit, the Amsterdam-based co-chair of the McKinsey Global Institute.

RETAIL

High street names jump on BNPL bandwagon

The Mail details how high street retailers such as John Lewis and M&S are tapping into the buy now, pay later (BNPL) trend with the former recently launching an online payment method in partnership with BNP Paribas that will let customers borrow up to £35,000 to fund home improvements and pay it back interest-free over 12 months. Currently, it has options on its website via Clearpay and PayPal to split purchases interest free. It teamed up with Clearpay at the end of 2019. But some fear the BNPL industry represents a “significant potential consumer harm” and needs to be regulated urgently.

ECONOMY

Higher-earning Brits set for post-lockdown spending spree

Britons have amassed some £160bn in excess savings, according to new calculations by Deutsche Bank economists, who predict £16bn of this will be spent as lockdowns ease, double what the OBR expects to be pumped into the economy. Deutsche Bank analyst Sanjay Raja said he wouldn’t be surprised if the figure hit £20bn. However, Raja pointed out that many on low incomes bore the brunt of the pandemic and were more likely to be going into debt: “These households, some may be on furlough and their costs are similar to before but their income is lower, are still reliant on credit, welfare, debt or family”.

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