BANKING
UK banks lead in implementing new standards
According to new research, UK banks are leading their global rivals in implementing the latest update to international banking standards. All UK banks surveyed have put measures in place to comply with the new rules, compared to only 61% of European banks and 57% of US banks. The Basel III reforms set new minimum standards for liquidity and capital requirements, and the latest update to those rules are set to come into effect in January 2025. The study also found that UK banks have seen huge costs as a result of complying with the incoming changes. While half of UK banks said the total costs could be in the range of $100m-$200m, 76% of European banks expected the total cost to be under $10m. The increased costs faced by UK banks reflect the fact that UK regulators have more closely aligned with the Basel regulations, while other jurisdictions have watered down the proposals.
Barclays to hire 200 traders in Paris
Barclays is planning to hire 200 new traders in Paris. The British lender expects to increase its headcount in the French capital by about two-thirds over the next two to three years as it increasingly becomes Europe’s main trading hub. Francesco Ceccato, chief executive of Barclays Europe, said: “The need to keep hiring traders on the continent is obvious. Europe needs to develop its capital markets to reduce reliance on banks, so we have an opportunity to grow.”
HSBC abandons plans for UK pensions business
HSBC has abandoned plans to expand beyond its core UK banking services and target the UK’s £62bn annual workplace pension market with its own-branded pension scheme.
INTERNATIONAL
UBS to make $35bn from Credit Suisse takeover
UBS is in line to make an almost $35bn (£28bn) gain after its emergency takeover of Credit Suisse. However, it said it could also see almost $4bn in costs related to litigation, regulatory matters and other liabilities after the takeover. It is also expecting to take a $13bn hit from asset and liability adjustments, meaning the takeover will cost it $17bn. UBS says it was rushed into buying rival Credit Suisse and complete the unwanted deal. In a filing to the US Securities and Exchange Commission, UBS said it had less than four days to conduct due diligence given the “emergency circumstances.”
Commerzbank doubles Q1 profit
Commerzbank's net profit nearly doubled in Q1, rising to €580m from €298m a year earlier, beating analysts' expectations. The bank raised its net interest income forecast to €7bn from €6.5bn, citing "upside potential" this year. Commerzbank is in the middle of a major overhaul, cutting thousands of workers and hundreds of branches to save costs and lift profits. CEO Manfred Knof said the bank is in good shape and its transformation plan is making good progress.
SocGen appoints top London banker
Societe Generale has announced that Thierry d’Argent has been appointed as group country head for the UK and Ireland and chief executive of the bank’s London branch. He will replace Demetrio Salorio, who has been appointed head of global banking and advisory.
AUTOMOTIVE
Carmakers urge officials to renegotiate Brexit deal
Global carmakers have called on the UK Government to renegotiate the Brexit deal, saying rules on where parts are sourced from threaten the future of the British automotive industry. Ford and Jaguar Land Rover have joined Stellantis, which owns the Vauxhall, Peugeot and Citroën brands, in voicing concern over stricter “rules of origin”, due to come into force next year, which could add tariffs on car exports. Stellantis has said that without a rethink, it could be forced to shut some of its UK operations. Ford said tariffs “will hit both UK- and EU-based manufacturers, so it is vital that the UK and EU come to the table to agree a solution,” while Jaguar Land Rover has called on the UK and EU to “quickly agree a better implementation solution to avoid destabilising the industry’s transition to clean mobility.”
FINANCIAL SERVICES
Former LCF chief sentenced over hidden assets
Michael Thomson, the former CEO of now collapsed London Capital & Finance, has been handed a suspended sentence after he was found to have breached an asset freezing order. The Serious Fraud Office froze his assets as part of its ongoing investigation into suspected fraud and money laundering linked to the collapse of the firm in 2019. Officials found that Mr Thomson hid £95,000 after the order was imposed. As a consequence, he has been handed a 10-month sentence, suspended for two years. SFO director Lisa Osofsky says the ruling shows that company executives “are not above the law.” She also noted that the SFO has “traced and seized every asset we have gone after” over the past two years, recovering over £140m for taxpayers. The collapse of London Capital & Finance saw 11,000 investors lose £237m in a mini bond-scheme.
BSPS advice firm under investigation by FSCS
Prism, an independent financial adviser associated with the British Steel Pension Scheme scandal, is under investigation by the Financial Services Compensation Scheme (FSCS). Prism Independent Financial Advisers was placed into solvent liquidation at the end of 2020. This has since been converted to a creditors’ voluntary liquidation. This satisfies the first condition for the FSCS declaring a default, so it is now investigating individual claims against the firm.
REAL ESTATE
British Land reports £1bn loss
Property developer British Land has reported a £1bn loss due to the end of the online shopping boom, which has dampened demand for its warehouses. The value of British Land's urban logistics portfolio fell by 24% in the year to the end of March. However, the company hopes to profit from the lack of new warehouse space available.
Property prices soar in London
Analysis shows that London's property market has seen record growth in the past year, with prices increasing by 7.7%. The report attributes the growth to a combination of factors, including low interest rates, a shortage of supply, and high demand from both domestic and international buyers. The report also predicts that the market will continue to grow, with prices expected to increase by a further 2% in the next year.
RETAIL
JD Sports on track to hit £1bn profits
JD Sports Fashion is set to hit £1bn of profits this year as it expands overseas. Revenue rose 18% to £10.1bn in the 12 months to the end of January, up from £8.5bn in the same period last year. Adjusted pre-tax profits rose 4.6% to £991m. At the statutory level, the company said pre-tax profit fell to £440.9m from £654.7m, as there was a "significant increase" in the adjusted items to £550.5m, from £292.5m the year before.
Frasers Group raises stake in Asos
Mike Ashley's Frasers Group has increased its stake in Asos to 7.4%, up from 5.1%, giving the troubled online fashion retailer a much-needed boost. Frasers Group has a history of investing in distressed listed companies with a view to profiting from any recovery in their share prices. Asos shares have declined about 70% since this time last year, with pre-tax losses swelling to £291m in the first half of the year.
ECONOMY
Bailey: Resilient economy makes outlook brighter
The governor of the Bank of England has described the UK's outlook as "looking a bit brighter" due to falling energy prices and "greater resilience in the economy than expected." Speaking at the British Chambers of Commerce's annual conference, Andrew Bailey also said there are signs that labour market tightness is loosening, although he warned that it “remains very tight." Pointing to a recovery in labour market participation, especially amongst younger workers, he noted that the number of vacancies has come down from “very high levels.” He added: "The ratio of the number of vacancies to the number of unemployed, a key measure of labour market tightness, has fallen as a result." Mr Bailey said the Bank would not hesitate to increase rates again if necessary but said there were "good reasons" to expect inflation to fall sharply in the coming months. He added that the Bank’s commitment to its 2% inflation target is “unwavering.”
Cost of living is the public’s top concern
A poll by More in Common shows that the cost-of-living crisis remains the top concern for the British public, with 75% of respondents citing it as the number one priority that ministers should address. More in Common UK director Luke Tryll said that ahead of the general election, the Government “needs the public to start believing things are getting better,” adding: “But as things stand only one in four Brits think the cost-of-living crisis will end this year or next.”
OTHER
Insurers could owe thousands following pandemic payment ruling
Small businesses that claimed on their insurance during the pandemic but had their payouts delayed could be owed thousands of pounds after a ruling by the UK’s financial ombudsman. In what campaigners say is a key test case, the ombudsman ruled that an 8% annual rate of interest should be paid on the sum pro rata over the period between the claim being declined and it being paid. This means many businesses could potentially make similar claims. About 370,000 small firms made insurance claims worth a combined total of around £1.2bn after lockdowns left them unable to trade. Many policyholders initially had their claims declined on the grounds that business interruption policies were not designed to cover a government-imposed lockdown. In 2020, the High Court found in favour of policyholders following a test case brought by the Financial Conduct Authority, although claims were not paid out until after a Supreme Court ruling in 2021.