FCA will have new powers to help protect cash access
The Financial Conduct Authority (FCA) is to be given new powers over banks and building societies designed to help protect access to cash. The Government said measures helping to ensure financial inclusion will be legislated for in the Financial Services and Markets Bill. Economic Secretary John Glen noted that millions of people across the UK still rely on cash, particularly those in vulnerable groups, adding that with the new powers for the FCA, “we are delivering on our promise to ensure that access to cash is protected in communities across the country.” The Government recently announced plans to provide the Bank of England with powers to ensure the wholesale cash infrastructure, including the network of cash centres, remains effective, resilient, and sustainable. John Howells, chief executive of ATM network Link, commented: “We are pleased that the FCA will have oversight and we look forward to seeing the consultation response in greater detail.” Natalie Ceeney, chair of the Access to Cash Review and Cash Action Group, said: "I am pleased that parties of all colours recognise the importance of access to cash. It is vital that we all work together to get the best outcome for consumers and small businesses.”
Lloyds to close 28 more branches
Lloyds Banking Group is to close a further 28 branches across Britain this year, with this coming just two months after it announced the closure of 60 sites. It will be closing 20 Lloyds Bank and eight Halifax branches between August and November this year. Lloyds said it would aim to support staff impacted and move those who wanted to stay to a new role. Lloyds Banking Group said that visits to the 28 branches affected have dropped by 60% since 2016, noting that each of the affected locations has a free to use cash machine as well as a Post Office within one mile. Vim Maru, group retail director of Lloyds Banking Group, said: 'Branch visits have been falling significantly for several years now, and this trend is continuing.” About 5,000 bank and building society branches have disappeared from UK high streets since 2015, resulting in a near halving of the UK's branch network, according to the Which? consumer group.
UniCredit and Commerzbank planned merger talks
People with direct knowledge of the matter have revealed that Italy’s UniCredit and German lender Commerzbank had planned to meet to start merger talks before abandoning the idea because of the war in Ukraine. UniCredit CEO Andrea Orcel had reportedly arranged to meet his Commerzbank counterpart Manfred Knof with a view to discussing a possible tie-up.
BBVA ups stake in Garanti to 86%
Spain's BBVA has paid $1.43bn to raise its stake in Garanti to 85.97%, following the end of its voluntary bid for the rest of the Turkish lender it did not own. Surpassing the 50% threshold will allow the Spanish lender to allocate more capital to Garanti without launching an additional tender offer.
ABN Amro sees Q1 profit
Dutch bank ABN Amro has recorded net profit of €295m in Q1, compared to a loss of €54m in the first quarter of 2021. This exceeded analyst estimates of €259m. The bank now expects full-year net interest income at the top end of its €5bn-€5.1bn guidance range before "bottoming out" in the first half of 2023. CEO Robert Swaak said: “ABN Amro's direct exposure to Russia is very limited, but we expect potential second-order effects to have an impact on our clients.”
Stewart Milne reports strong recovery
Housebuilder Stewart Milne has reported a "strong recovery" after narrowing its losses in the last financial year. The Aberdeen-based group said turnover for the year to 31 October rose by £36m, to £306m, as market conditions improved and demand increased. Its overall loss fell from £71.5m the previous year to £8.1m. The group saw turnover from its housebuilding operations climb by £16m to £209m.
Aviva sales jump 5%
Aviva has said it is on track to meet its financial targets after its sales increased by 5% to £2bn, on the back of strong trading in the UK and Canada. The firm revealed it had brought in an extra 100,000 UK customers over the previous year, bringing its total up to 15.4m. Aviva said its UK & Ireland sales increased 2% to £8.4bn, as its general insurance sales increased 5% to £2.1bn. Earlier this week, Aviva released £3.75bn to shareholders via a B-share programme, and will also return a further £1bn by the end of this month.
Aviva CEO: Sexist comments are a wake-up call for City
Aviva chief executive Amanda Blanc has spoken out after suffering sexist abuse at the company’s annual meeting last week, saying she wants “results to be the focus of attention rather than being judged on whether I wear trousers.” Her comments came after three small investors made “simply inappropriate” remarks at the annual meeting. One investor said that Ms Blanc is “not the man for the job,” while another mentioned some of her male predecessors and asked whether she should be “wearing trousers.” A third praised the gender diversity on the insurance firm's board before saying: “They are so good at basic housekeeping activities, I’m sure this will be reflected in the direction of the board in future”. Ms Blanc has said that sexism and “unacceptable behaviour” has become worse and more “overt” the more senior she has become. She added that the best way to tackle misogyny is to promote more women, saying: “What needs to happen is there needs to be more females in more senior roles, it’s as simple as that, so that it becomes more of the norm.” Asked whether she believed the scandal was a wake-up call for the City, she said: “Yes, I genuinely do.”
Moderna chair defends executive hiring process after CFO fiasco
Moderna chair Noubar Afeyan has defended the biotech company’s executive hiring process after it was forced to fire its new CFO after just one day in the job.
LEISURE & HOSPITALITY
Pub groups raise prices amid soaring costs
Pub groups Marston's and Mitchells & Butlers have warned of price increases for consumers amid soaring operational costs. M&B, which owns Harvester and All Bar One, said it expects an 11% increase in its £1.8bn cost base this year, with a further 6% rise next year. The group reported a profit of £57m in the six months to April 9, from a pre-tax loss of £200m, while revenues rose from £219m to £1.16bn - up by 2.2% on pre-pandemic levels. Like-for-like sales rose by 1% compared to 2019. Meanwhile, Marston's reported revenue of £379.7m for the half-year to April 2, compared to the £55.1m achieved in the first half of the year. The group swung from a pre-tax loss of £105.5m to a profit of £25.6m, with like-for-like sales reaching 97% of pre-pandemic levels.
Buyers warned against taking out large mortgages
Housing expert Paul Cheshire says homebuyers should "under no circumstances" take out large mortgages to buy property, warning that the market is the most exposed to persistently falling prices it has been in three decades. Mr Cheshire, a former government adviser and emeritus professor at the London School of Economics and Political Science, has predicted that prices could fall by 10%, adding that the decline “could be bigger, but there is a lot of uncertainty.” He warned: “The last time the housing market looked this bad was 1989,” adding: “My instinct right now is that under no circumstances would I borrow a lot of money to buy a house.” Nationwide data shows that after house price growth hit a high of 32% in 1989, values fell 11% and continued to fall for three-and-a-half years.
First-time buyers see prices increase £24 a day since 2017
House prices for first time buyers have risen by £24 a day since 2017, according to analysis from Direct Line Home Insurance. The average buyer stepping onto the property ladder currently pays £223,751. This is £43,623 more than the average recorded in 2016. The 24% increase is equivalent to £23.89 a day. The analysis also revealed the UK’s first time buyer hotspots, with Burnley in Lancashire seeing prices jump 45% over the past five years. Dan Simson, head of Direct Line Home Insurance, said the rate at which prices for first time buyers have been increasing is “frankly frightening.”
Grainger sees profits surge 120%
Earnings at Grainger have more than doubled. Britain's biggest listed residential landlord revealed profits climbed to £75.6m in the six months to the end of March from £34.3m in the same period the previous year. Profitability received its greatest boost from an uplift in net valuation on its investment assets, which skyrocketed by £49m year-on-year to £59.3m. Occupancy levels within Grainger's private rented sector portfolio rose to a record 98%. Combined with a 3.5% like-for-like increase in the average rent charged to its tenants, this helped boost net rental income by 23% to £42.8m. Revenues rose by around a quarter to £126.6m even though sales of residential units fell by about two-thirds, due mainly to weaker demand for non-vacant properties.
M&S in online sales tax warning
Marks and Spencer’s CFO, Eoin Tonge, has written to the Chancellor warning that an online sales tax would damage the high street. While the Treasury says the proceeds would go towards funding a reduction in business rates for shops, M&S fears the tax would "punish" the retailers it plans to support and leave them less money to invest in stores. "Introducing an additional tax on retail - already overburdened - will simply mean retailers cut their cloth accordingly," he said. He added that “rationalisation will always start with the least profitable parts of a business - which, in the case of multi-channel retailers, will more often than not be high street stores.”
Inflation hits 40-year high of 9%
UK inflation has hit its highest level for more than 40 years, with the consumer prices index rising from 7% in March to 9% in April. The Office for National Statistics said April’s 54% increase in the energy price cap was the main reason for the jump, accounting for around three-quarters of the increase. Figures from the Resolution Foundation show that the poorest 10% of households faced an inflation rate of 10.2% in April, compared to 8.7% for the top 10% of earners, while the Institute for Fiscal Studies estimates that the inflation rate experienced by the poorest households could be closer to 11%. Noting that the energy price cap rise has been driven by higher global energy prices, Chancellor Rishi Sunak said: “We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action.” The Bank of England has warned that inflation is likely to climb above 10% later this year, far exceeding its 2% target. Paul Dales, chief UK economist at Capital Economics, said the rise in inflation “heaps more misery on households and highlights the pressure on the Bank of England to keep raising interest rates.”
Labour calls for emergency budget
Labour will urge the Government to commit to an emergency budget addressing the cost of living crisis and has called for a VAT cut on energy bills and extra help on energy costs for the lowest paid. Meanwhile, Liberal Democrat leader Ed Davey has called for a VAT cut, arguing that the “warning lights are all flashing red and Boris Johnson hasn’t a second to lose”. The British Chambers of Commerce has also called for the Chancellor to hold an emergency mini-budget, with Suren Thiru, its head of economics, saying: “The scale at which inflation is damaging key drivers of UK output, including consumer spending and business investment, is unprecedented.” He added that there is “a real chance” that the UK will be in recession by Q3.
Bank of England could accelerate rate hikes
A City economist believes the Bank of England (BoE) will have to launch a cycle of steeper and quicker interest rate hikes to tackle soaring inflation. With inflation hitting 9% in April, Investec economist Sandra Horsfield said high price rises “up the ante even further for the Bank of England to respond,” adding that “the case for frontloading monetary tightening looks stronger by the day.” Meanwhile, analysts believe there will be at least four more interest rate rises this year. Bank of America has told clients to expect interest rates to double from 1%, suggesting that the BoE will raise rates by 0.25 percentage points in June, August, September and November. Elsewhere, ING has suggested April’s 9% inflation rate “will mark the peak,” adding that it could fall back to the BoE’s 2% target by the end of 2023.