UK losing £2,300 per minute to fraud
People in the UK lost £1.2bn to fraud in 2022, the equivalent of £2,300 every minute, according to bank industry group UK Finance. It said around three million scams took place - slightly less than the previous year - with frauds involving payment cards being the most common. UK Finance said losses were not always reimbursed and urged tech firms to "share the burden" of covering costs. UK Finance boss David Postings said drugs gangs, criminal groups abroad and "state-sponsored bad actors" were responsible for the majority of fraud. He added that while banks were legally obliged to refund so called unauthorised fraud, they did not have to cover the costs of authorised scams - where victims are tricked into agreeing to send sending money to fraudsters. As a result, banks only refunded about 59% of the losses from this type of fraud on a voluntary basis, amounting to £285.6m of the £485.2m stolen. A separate report from the Home Office, written in 2020 but published only last week, reveals that one in five UK companies fell victim to fraud between 2018 and 2020 but the majority did not report it to the police.
High street banks tighten small business lending
Data from fintech firm Iwoca shows high street banks are reining in small business lending with some 77% of brokers reporting a reduction in appetite for funding SMEs. Just under two-fifths of brokers have seen an increase in applications for funding being rejected over the last quarter. That said, according to over half of brokers, the most common reason for SME loan applications was to expand the business. Richard Davies, chief executive of SME lender Allica Bank, suggests proposals from the Prudential Regulation Authority to implement Basel 3 standards forcing banks to hold more capital against loans to the sector will only add to the difficulties in raising cash. “Today’s data highlight the importance of choice in SME lending and we hope the regulator hears our call for action in amending the current proposals,” he added.
More banks probed over savings rates
MPs on the Treasury Committee have expanded their review of the low savings rates offered by UK retail banks to include Nationwide, Santander, TSB and Virgin Money. “The UK's biggest banks are continuing to squeeze record profits from their loyal savers,” Harriett Baldwin, chair of the committee, said. “Consumers should continue to vote with their feet and find better offerings. This, more than anything, will drive the banks to increase their currently measly rates.”
FCA pledges ‘robust action’ to enforce new UK consumer protections
The Financial Conduct Authority warned firms on Wednesday that they face tough action if they are not ready for the regulator’s new “consumer duty” package, which obliges banks, asset managers and other providers of regulated financial services to prove they are acting in customers’ best interests.
US banks generated record $80bn first-quarter profits despite turmoil
Despite the recent turmoil, the US banking sector saw profits rise 33% on a year ago to hit $80bn in the first quarter. JP Morgan saw the biggest profit, notching $11.7bn while the biggest loss was recorded by PacWest which lost $1.2bn. In a report on first quarter earnings, analysts at Morningstar said the largest banks were “well positioned” but smaller lenders saw interest expenses climb nearly ten times compared to last year as banks had to offer higher savings rates to attract customers.
BoA opens Luxembourg branch
Bank of America has created a branch in Luxembourg as the lender seeks to grow its business in Europe. Former BNP Paribas banker Benoit Nevouet will lead the unit.
Credit Agricole's Q1 earnings beat expectations
Credit Agricole posted better-than-expected earnings on Wednesday. France's second-biggest listed bank saw its trading revenue boosted by market volatility.
Volkswagen investors demand independent audit of car plant in China’s Xinjiang
Shareholders in Volkswagen have demanded an independent audit into the German carmaker’s plant in Xinjiang, China, amid concern over Beijing’s alleged human rights abuses in the area. Deka Investment and Union Investment have called on the Volkswagen to require of its joint venture partner SAIC that it conducts an external independent audit of the plant. "Volkswagen must be certain that its supply chains are clean," said Ingo Speich, head of sustainability and corporate governance at Deka. Reuters notes that the United Nations last year said that China's "arbitrary and discriminatory detention" of Uyghurs and other Muslims in its Xinjiang region may constitute crimes against humanity.
Binance attacks US crackdown on crypto
The world’s largest cryptocurrency exchange has said a crackdown on crypto by the Biden administration has made it “very difficult” to do business in the US. Patrick Hillmann, Binance’s chief strategy officer, said it was a “very difficult time” to do business in the US and that the situation had been “very confusing over the past six months”. He went on to say that the company would do “everything we possibly can” to secure regulatory approval in the UK. The comments comes after Coinbase’s chief executive, Brian Armstrong, suggested last month that he could relocate the company out of the US, with the UK as an option.
Carl Icahn’s company hit after it reveals inquiry by US prosecutors
Icahn Enterprises saw its shares fall as much as 20% on Wednesday after the company disclosed that New York prosecutors had requested information on its business, including corporate governance, valuations and due diligence. The move comes just days after a report by Hindenburg Research accused the activist investor's business of inflating the value of its holdings and running a "Ponzi-like" scheme to pay its dividend. It is not clear why prosecutors contacted the company, which also released a rebuttal to the Hindenburg report on Wednesday accusing it of being “self-serving”.
LEISURE & HOSPITALITY
JD Wetherspoon sales soar
JD Wetherspoon has reported a surge in like-for-like sales of 12.2% in the three months to the end of April, with sales momentum continuing in recent weeks. The group enjoyed its highest-ever sales in the Easter week and its busiest-ever Saturday over the May bank holiday weekend. It also expects full-year profit to come in towards the top of market expectations. But founder and chairman Tim Martin warned of continued pressure on the hospitality sector from higher costs, especially in labour, energy and food costs. Trade has recovered since restrictions were lifted, although its town and city centre locations have struggled due to falling footfall as more people now work from home.
MEDIA & ENTERTAINMENT
Google unveils AI-powered search engine to rival Microsoft’s Bing
Google has announced plans to integrate more advanced artificial-intelligence technology into its search engine as the company looks to catch up with rival Microsoft’s AI-driven Bing search engine. Search Generative Experience - which will be part of Google - will craft responses to open-ended queries, the company said. However, the system will only be available to a limited number of users and is still in "experimental" phase.
UK house prices falling less rapidly as pessimism eases, say estate agents
A poll by the Royal Institution of Chartered Surveyors found an easing of pessimism in the housing market with prices falling less sharply and price expectations for the year ahead rising. Separately, plans being drawn up by the Labour Party would increase the stamp duty paid by foreign buyers of UK property while also restricting the sale of new-build properties to overseas investors.
Asos optimistic despite posting loss
Asos has reported a £290.9m loss before tax for the six months to the end of February, wider than a £15.8m loss the year before. The online fashion retailer said revenue declined 7% in the first six months to February, falling to £1.84bn compared to £2bn in the same period last year. However, Asos said that the dip in earnings reflects “deliberate actions” by the group to boost profitability, including reduced markdowns and discipline on “marketing spend”.
Bank rate forecast to rise to 4.5%
The Bank of England is widely expected to raise interest rates for a 12th consecutive time today as it tries to control inflation, which currently stands above 10%. The Bank rate, which is already at its highest level for 14 years, is forecast to go up from 4.25% to 4.5%. Meanwhile, the National Institute of Economic and Social Research is predicting that inflation will not return to the Bank of England’s 2% target until the third quarter of 2025. This is a more pessimistic outlook than the BoE and the Office for Budget Responsibility, who think price growth will fall rapidly in the coming months. Leaza McSorley, head of macroeconomic research at the think tank, said interest rates could peak at 4.75% or above and would only fall slowly as inflation persists in the coming year.
UK firms trim permanent hiring
A survey by the Recruitment and Employment Confederation found that in April businesses in the UK reduced hiring of permanent staff via recruitment agencies at the fastest pace in more than two years. However, temporary hiring rose at the fastest pace in seven months. "Firms are hedging their bets," REC Chief Executive Neil Carberry said. "After a better month in March, in April we saw permanent hiring fall back quickly and businesses turn to temps to help them through. London had a particularly difficult month." Staff availability increased for the second month in a row in April while salaries for people starting permanent roles increased at the fastest pace in four months.