Bank of England tells banks to preserve access to cash
The Bank of England (BoE) has told large banks they must detail how they will keep enough cash in circulation as the pandemic accelerates its decline. With analysis showing that more than 5m people still rely on cash in their day-to-day lives – with many of these having limited access to banking – officials have given banks until March to set out plans. The Bank said: “To help support this, HM Treasury will provide the Bank of England with the powers that it needs to keep the wholesale infrastructure sustainable and resilient into the future.” A BoE report in 2020 proposed a single entity responsible for distributing cash, with this to be funded by banks. The Bank now says there is no consensus for this, pointing to doubts over how quickly it could be set up due to the IT challenges such a project would involve. With the BoE instead opting for industry-wide commitments to maintaining sufficient cash distribution, UK Finance says major retail banks including Lloyds, NatWest, Barclays and HSBC have agreed that if the core cash service in any community faces closure, cash machine network Link will have the power to commission new services which the banks would fund. Financial Services Minister John Glen said: “This is a great start, and I look forward to seeing the impact of industry’s announcements for new and improved cash facilities in local communities across the UK.”
Sutor Bank joins BCB Group
BCB – a provider of business accounts and trading services for the digital asset economy – has announced that Hamburg-based Sutor Bank is joining the group. Sutor Bank managing partner Robert Freitag said that becoming a member of BCB Group “allows us to continue our growth-oriented fintech and crypto strategy.”
Bitcoin could become ‘worthless’, says BoE
The Bank of England has said that bitcoin could be “worthless”, warning that people investing in the digital currency should be prepared to lose everything. The BoE has questioned whether there is any inherent worth in the most prominent digital currency, with deputy governor Sir Jon Cunliffe saying the Bank must be ready for risks linked to the rise of the crypto asset following rapid growth in its popularity. He warned: “Their price can vary quite considerably and [bitcoins] could theoretically or practically drop to zero”. The Bank’s financial policy committee said there was little direct threat to the stability of the UK financial system from crypto assets - but warned that such assets could become more interconnected with traditional financial services and were likely to pose a number of risks. “Enhanced regulatory and law enforcement frameworks, both domestically and at a global level, are needed to influence developments in these fast-growing markets in order to manage risks, encourage sustainable innovation and maintain broader trust and integrity in the financial system,” it said.
FOS levy to increase by 10%
The Financial Ombudsman Service's (FOS) expected cost base for 2022/23 will be £293.8m, an increase of 18% on the £249.4m levied for the current year. The FOS said it expects to fund this through a levy increase of £10m to £106m, as well as cuts to its cost base. A consultation on its strategic plans and budget for 2022/23 also details that the voluntary jurisdiction levy will remain £950,000 and the individual case fee will remain at £750. Overseen by the Financial Conduct Authority, the levy will be payable by regulated businesses and will apply to regulated adviser firms. The FOS said it will aim to raise £11m by reducing free cases to pre‑PPI levels from 25 to 3 and reducing free cases for group firms from 50 to 15. It said around 850 more firms are expected to pay a case fee in comparison to 2020/21. The FOS expects to receive approximately 177,000 complaints including 17,600 about investments and pensions, and resolve approximately 210,500 complaints.
Hedge funds to end 2021 with positive inflows
Global hedge funds are poised to achieve positive inflows for the first time since 2018, with analysis by Preqin showing that hedge funds have attracted flows totalling £30.9bn in the first three quarters of the year. This compares to outflows of £73.5bn and £33.7bn in 2019 and 2020 respectively. This year’s performance has been driven by strong returns and a shift that has seen investors look to alternative assets during a period of volatility and rising inflation. Global hedge funds gained 13.9% on average between January and November this year, marking a third successive year of returns above 10%. Event-driven strategies, which bet on corporate changes such as mergers and restructurings, led with a 15.1% gain, while equity strategies delivered a 12.3% increase.
UK advertising regulator issues rebukes to crypto industry
The Advertising Standards Authority has criticised the crypto industry over “widespread” problems with misleading and irresponsible ads, saying marketing in the sector is a “red alert” priority for the advertising watchdog.
LEISURE & HOSPITALITY
Punch Pubs sold
US-based Fortress Investment Group has acquired Punch Pubs from Patron Capital in a deal believed to be worth up to £1bn.
Property prices down 1.1% as stamp duty holiday ends
House prices fell 1.1% in October compared to September, with the slip coming in the first month where the stamp duty holiday was no longer in place. Year-on-year, prices were 10.2% higher in October. This marks a slowdown, with annual growth lower than the 12.3% recorded in September. The Office for National Statistics data shows that the average UK house price was £268,000 in October, down from a record £271,000 seen in September.
Hammerson brings in £495m from 2021 asset sales
Property firm Hammerson has reported total gross cash proceeds of £92m for the exchange or completed sales of six non-core assets since the half year, bringing total gross proceeds from 2021 sales to £495m.
FA and Barclays sign £30m women's football deal
Barclays is to invest more than £30m in women's and girls' football over the next three years, the Football Association has announced. The bank has agreed new sponsorship deals running to 2025 with the FA and the Premier League. It became the title sponsor of the Women's Super League in 2019 and will be the title sponsor of the Women's Championship from 2022/23.
Inflation hits a ten year high of 5.1%
Figures from the Office for National Statistics (ONS) show that inflation hit 5.1% in the 12 months to November, exceeding forecasts of a 4.7% increase and driving the rate further beyond the Bank of England’s (BoE) 2% target. The rate up on the 4.2% recorded a month earlier and means inflation is now at its highest level since September 2011. ONS chief economist Grant Fitzner said: "A wide range of price rises contributed to another steep rise in inflation, which now stands at its highest rate for over a decade." The increase in inflation will intensify debate over a rise in interest rates, with the BoE’s Monetary Policy Committee meeting today to decide whether to increase rates from a record low. While the Bank is expected to hold rates static while it gauges the impact of the Omicron coronavirus variant, the International Monetary Fund has warned it against “inaction bias”. Pantheon Macroeconomics economist Samuel Tombs said that while inflation is now "uncomfortably high" for the Bank, rate-setters are likely to “hold fire". Reflecting on the ONS data, Chancellor Rishi Sunak said he understands the impact on consumers and “how challenging rising inflation can be for families and households.” However, Shadow chief secretary to the Treasury Pat McFadden said the figures “are a stark illustration of the cost-of-living crisis facing families this Christmas”, adding: “Instead of taking action, the government are looking the other way, blaming 'global problems' while they trap us in a high-tax, low-growth cycle."
Firms call for support as Covid cases surge
Business groups are calling on the Government to help firms being hit by the rise in Covid cases. The Treasury insists it had no plan to extend support beyond current measures, with the Government ruling out a return of the furlough scheme. The British Chambers of Commerce has called for the Treasury to support businesses, with president Baroness Ruby McGregor-Smith saying firms that "have survived nearly two years of challenging trading conditions, are now seeing their vital festive income melt away in front of their eyes." She said firms "deserve better", criticising the fact that officials have offered no rationale as to why they do not feel fresh support is needed. UK Hospitality has called for business rates to be deferred and VAT discounts set to end in March 2022 to be extended. The Confederation of British Industry wants ministers to provide support "in lockstep with future restrictions" and has asked the Government to tell councils to immediately release unused grants and rates relief to businesses in need. CBI chief economist Rain Newton-Smith said implementing new measures to tackle the Omicron variant was "the right thing to do", but added it had "dented" demand and consumer confidence. She warned that further support for struggling firms will be needed in future if new measures and restrictions are brought in.
Companies led by women attract 96% less funding
Businesses led by females received 96% less funding on average than those led by men this year, according to new data from The UK Domain. While fintech start-up Starling Bank received £686m, the highest amount of funding for a female-led UK business in 2021, the company with the highest funding, The Hut Group, took five times as much. The e-commerce firm is led by Matthew Moulding. The study also found that just under a third of UK businesses are owned by women, and of those just 17% were also founded by women.