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Daily News Roundup: Thursday, 16th September 2021

Posted: 16th September 2021


Bank of England urged to penalise fossil fuel financing

Lawmakers have urged the Bank of England (BoE) to help tackle climate change by penalising banks that finance the fossil fuel industry, with the cross-party group also calling on the Bank to tackle climate change by boosting investment in green finance. In a letter to BoE governor Andrew Bailey, the lawmakers said the financial sector is under-pricing climate-related risk. "With the right policy decisions, the Bank can play an instrumental role in mobilising and steering private finance to help deliver the government´s goals, incentivising job creation and encouraging essential investments in green infrastructure”, the letter said. The group suggested the Bank could provide cheaper credit to banks on the condition they lend more to sustainable projects, including those run by SMEs.

Savers miss out on £1.6bn due to account loyalty

Research from Hargreaves Lansdown highlights how British savers are missing out on £1.6bn a year by failing to switch accounts, with £246.5bn held in accounts that pay no interest. Despite savings rates remaining low, savers are reluctant to find better deals, with a Hargreaves Lansdown poll of 2,000 people showing that 50% have not switched savings accounts in the past five years and 37% have never switched at all. Sarah Coles, a personal finance analyst at Hargreaves Lansdown, comments: “Our loyalty to our bank, and to savings accounts paying miserable rates of interest, is costing us billions of pounds … Even if we just switched the money collecting dust in accounts paying no interest at all we could make £1.6bn in interest”.


Private equity playing a ‘vital role’ in SME funding

Claire Madden, managing partner at Connection Capital, says that while private equity “has been branded the bad guy” for snapping up businesses hit by the pandemic, its “role as a pantomime villain is worn out”. She says private equity plays a “vital, constructive” role in funding SMEs, with data from the British Venture Capital Association showing that more than £10bn was invested by the private equity community in UK venture capital, growth capital and buyouts in 2019, with around 1,500 businesses benefitting from this funding.


Criminal charges pressed against Bank of Queensland

The Australian Securities and Investments Commission has said it has pressed criminal charges against Bank of Queensland unit ME Bank, alleging that the digital lender made "false and misleading" representations about certain interest rates and repayments. A total of 62 charges have been laid against ME Bank in the Federal Court of Australia. 

Goldman to buy GreenSky

Goldman Sachs has agreed to buy GreenSky, a fintech platform that provides home improvement loans, in an all-stock deal valued at $2.24bn. The purchase will bulk up Goldman's consumer banking unit, Marcus. The deal, which has been approved by the boards of both companies, is expected to close in the fourth quarter of 2021 or Q1 2022.

BNP Paribas acquires majority stake in Dynamic

BNP Paribas Asset Management is to acquire a majority stake in Dynamic Credit Group, a Dutch asset manager and specialist lender with €9bn of assets under management. BNP Paribas said the deal would allow Dynamic Credit, whose portfolio mainly consists of Dutch mortgages, to access to a larger distribution network. The price of the acquisition was not disclosed.

New board members to be appointed by Commerzbank

Erste Group's Thomas Schaufler and Roland Berger's Joerg Oliveri del Castillo-Schulz are set to be appointed to he management board of Commerzbank. Mr Schaufler is lined up to take over the retail banking division, while Mr Oliveri del Castillo-Schulz will oversee IT, according to reports. 


Redrow re-builds revenue towards pre-pandemic levels

Redrow has revealed that revenue has started climbing to pre-pandemic levels, as the housebuilder touted a “record” order book after reinstating a dividend for shareholders. Revenue reached £1.94bn in the year to June 27, just 8% behind 2019, after it soared 45% from 2020’s supressed figure. Profit before tax increased 124% to £314m from the year before, which lagged 23% behind its pre-pandemic profit. Meanwhile, the housebuilder’s record order book has grown by a further £420m on 2019’s orders. Redrow has forecast an at least £2.2bn revenue for 2024.


FCA launches investment campaign

The Financial Conduct Authority (FCA) has launched a campaign designed to improve the way people manage their money, with the watchdog looking to reduce the number of savers with money held in poor-paying savings accounts while also reducing the number of investors putting money they cannot afford to lose into high-risk investments. The initiative will see the FCA encourage 1.7m people in the UK to invest their money by 2025, with the financial regulator targeting a portion of the estimated 8.6m people that have more than £10,000 in cash. The FCA will look to halve the number of retail investors taking too much risk, with FCA analysis suggests 45% of those who had invested without advice did not understand that they could lose money. The City watchdog plans to increase efforts to block investment fraud and ensure that savers know how to seek compensation if their investments go wrong, with it also looking to overhaul rules and impose tougher requirements on operators seeking approval for financial promotions. 

Small businesses receive £1bn in insurance payouts

Small companies which demanded that their insurers cover claims for losses accrued during the pandemic have received more than £1bn in full and interim business interruption payouts to date, the Financial Conduct Authority (FCA) has said. Firms won the right to insurance payouts after judges ruled that many policies should cover losses caused by lockdowns. The FCA, which brought a test case against major insurers on behalf of policyholders, says 27,248 companies out of the 42,308 which had claims accepted have received at least an interim payment.


Wagamama leads the way for TRG

The Restaurant Group, owner of the Wagamama and Frankie & Benny’s restaurant chains, says it has bounced back strongly since the resumption of trading, outperforming the market across all four of its businesses. TRG said that as a result of its trading performance since the full reopening of the sector, it is raising its full-year earnings guidance, although it issued a note of caution over inflationary pressures. Wagamama led the way, with like-for-like sales up 21% on the same 15-week period in 2019, while its leisure division was up 18% and its pub business up 12%.


Manufacturers' costs rise at fastest pace in a decade

Data from the Office for National Statistics (ONS) show that UK manufacturers’ costs rose at their fastest pace in a decade last month. Input prices, which reflect materials used in the day-to-day running of manufacturing businesses, were up 11% in August, the sharpest rate of growth since late 2011. Oil and fuel prices that have jumped amid a surge in global demand as lockdown restrictions have eased were the main contributor to cost increases, with the price of metals the next largest contributor. The manufacturing sector also saw challenges stemming from supply chain issues that left raw materials in short supply. Higher production costs saw manufacturers raise prices to protect margins, with prices for factory goods up 5.9% over the last year.


Average house price fell £10k in July

The average UK house price fell by £10,000 month-on-month in July, according to data from the Office for National Statistics (ONS). The average price in July was £256,000, with this down on the record high of £265,448 seen in June but up £19,000 on July last year. While average prices were up 8% in the year to July, this marked a decline on the 13% climb recorded in the year to June. Much of this decline has been attributed to the fact buyers rushed to complete deals before the stamp duty holiday tapered at the end of June, driving a surge in activity that month. The year-on-year increase differed across the four nations of the UK, with Scotland’s 14.6% rise marking the steepest growth as average prices north of the Border hit £177,000. Wales saw prices climb 11.6% to an average of £188,000, while Northern Ireland recorded a 9% increase and a typical value of £153,000. England saw the smallest increase, at just 7%, but saw the highest average price at £271,000.


August sees record inflation rise

Office for National Statistics (ONS) figures have shown that inflation rose to 3.2% in August from 2% in July, with this marking the largest increase on record. The consumer prices index (CPI) measure of inflation was the highest since March 2012 and the rate exceed a 2.9% estimate put forward by economists polled by Reuters. The increase was driven by restaurant and cafe prices which were steeper than a year ago as August 2020 saw prices far lower due to discounts offered under the Government's ‘Eat Out to Help Out’ scheme. Transport costs were up as petrol prices hit a high not seen since 2013, while food prices and the cost of used cars also helped drive the spike. Jonathan Athow, deputy national statistician at the ONS, said much of the increase in inflation is “likely to be temporary”. Laura Suter of AJ Bell said that while the price increase is expected to be temporary, the Bank of England has predicted prices will rise further before the end of the year, “so we shouldn't bank on this being a flash in the pan." The Bank expects inflation to peak at 4% this year. Reflecting on the ONS figures, Hargreaves Lansdown analyst Sarah Coles said much of the “enormous” jump was powered by an “alarming imbalance between supply and demand”. 

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