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Daily News Roundup: Thursday 19th November 2020

Posted: 19th November 2020


ECB: UK banks must move City staff, despite pandemic

The European Central Bank (ECB) has said it expects UK-based lenders to move staff and assets to the eurozone if they want to keep serving EU clients after the Brexit transition period, saying the coronavirus pandemic is not a valid excuse to stall moves. The ECB said: “It is important to note that remote working arrangements do not change the fundamental need to relocate staff to the EU,” adding: “Ensuring that banks have a physical presence within the EU to the extent necessary is a prerequisite for achieving prudent risk management and effective supervision.” The ECB noted that most banks, including Credit Suisse, Citi, and Morgan Stanley, had already made the necessary moves, saying: “The year-end risks for banks supervised directly by the ECB appear to be contained”.

MP voices concern over bank’s takeover talks

MP Kevin Hollinrake, co-chair of the All-Party Parliamentary Group on Fair Business Banking, has voiced concern over the news that the Co-op Bank is holding takeover talks with US private equity firm Cerberus Capital Management. He said he “couldn't think of a worse bidder” for the self-branded ethical lender, saying Cerberus has “a terrible track record of how they treat borrowers, and are incredibly aggressive.” Mr Hollinrake added: “This is the antithesis of ethical banking. It's really worrying for the Co-op Bank, because they've had a history of being commercial but also very altruistic.”

Union hits out over Lloyds closures

Bosses at Lloyds have been urged to halt plans to shut 56 branches, with Unite national officer Rob MacGregor saying the closures are “unjustified and damaging”. He added: “The pandemic has highlighted the vital role our local bank branches play in providing an essential service to the community.” The closures, which were postponed during the coronavirus pandemic, are set to start in March and will see Lloyds, Halifax and Bank of Scotland branches lost.


KKR to acquire animal health firm

KKR is to take a majority stake in animal health firm Argenta from Tomlinson Group. Although terms of the deal were not disclosed, a person familiar with the matter said KKR has agreed to pay around $100m.


UBS expands hybrid digital platform

UBS hopes to pull in $5bn in assets through international expansion of its digital portfolio management system. It is extending My Way, a hybrid platform that allows clients to customise their portfolios digitally with the assistance of human advisers. It has attracted $1bn since launching to Swiss domestic clients in May, reaching the landmark sum a year ahead of target as the pandemic drove greater use of online services.

IMF urges German banks to delay dividends

The International Monetary Fund says the German banking sector is likely see the coronavirus crisis deliver a significant hit to profits and capital, but said it remains broadly resilient. It has urged sector supervisors to tell private lenders like Deutsche Bank and Commerzbank not to pay dividends or do share buybacks during the pandemic.

HSBC allows wider home working

Following an increase in remote working during the coronavirus pandemic, HSBC is to allow some of its Hong Kong employees to work as many as four days a week at home.


European car sales slide

Figures from the European Automobile Manufacturers’ Association have revealed that last month saw sales of new cars decrease 7.8% to 953,615 units. BMW reported sales down 11.8%, while Volkswagen saw a 7.5% dip and PSA posted a decline of 5.3%.


Norwegian Air files for bankruptcy

Norwegian Air has filed for bankruptcy protection in Ireland, using the Irish protection as its 140 aircraft are legally owned by an entity wholly owned by Norwegian that is registered in Ireland. The airline will use the reorganisation to cut its debt pile, offload aircraft and raise new capital. It will continue to operate its flight schedule during the process and its shares will still be traded on the Oslo stock exchange.

Boeing 737 Max receives FAA approval

The Boeing 737 Max has received regulatory approval to fly again in the US, though the US Federal Aviation Administration said the clearance would not allow the model to "return immediately" to service. European aviation officials have said a similar decision is likely to be made soon.

Extra bailout sought by Air France-KLM

Air France-KLM is seeking up to €6bn of fresh funds as the coronavirus pandemic continues, with governments in France and the Netherlands discussing support measures. Any additional funding would follow a €10.4bn government bailout made earlier in the year.


Lanistar not authorised, warns FCA

The Financial Conduct Authority (FCA) has told consumers to be wary of Mastercard-backed payment card fintech Lanistar, saying it believes that the firm has been providing financial services or products in the UK without authorisation from the City watchdog. A spokesman for Lanistar said: "We confirm that we are not providing financial services or products without the FCA's authorisation. We will be partnering with firms that are authorised by the FCA." It added: “We are in the process of contacting the FCA to clarify the position and will be requesting that the notice is removed."

RSA takeover agreed

RSA has agreed a £7.2bn takeover offer from Canadian insurer Intact Financial Corporation and Scandinavian firm Tryg. Intact is paying £3bn and will take RSA's UK and Canadian operations, and Tryg is paying £4.2bn and will keep the Swedish and Norwegian businesses.


Vaccine’s efficacy better than thought

Pfizer says it is set to submit data on trials of a coronavirus vaccine it has developed with Germany’s BioNTech to regulators in the US and UK “within days”. This came as the drugmaker revealed the final results of testing, with it found that the drug has 95% efficacy – up from 90% in initial reports last week and equalling early results announced by Moderna.


Cineworld looks at CVA in bid to hold out until next spring

Cineworld is hoping to secure a reduction in rents and will permanently close some UK cinemas to try and survive the pandemic, after a lack of blockbuster films hit profits.


M&C Saatchi’s three amigos to go

M&C Saatchi has announced that CEO David Kershaw, executive chairman Jeremy Sinclair and executive director Bill Muirhead - dubbed the "three amigos" within the industry - will all step down from the advertising group.

Pandemic halves music industry value

Figures released by UK Music reveal that the value of the music industry in Britain is likely to halve in size in 2020, with the body reporting that it expected up to 85% of live music revenue to be lost.


House prices hit record high in September

Office for National Statistics (ONS) figures show that the average UK house price climbed by 4.7% in the year to the end of September, hitting a record high of £245,000. The ONS says pent-up demand and the stamp duty holiday are likely to be among factors that drove the increase in typical values. In England, average prices were up 4.9% to £262,000, while homes in Scotland saw the typical price climb 4.3% to £162,000. Wales recorded an increase of 3.8%, taking the average to £171,000, and Northern Ireland saw a 2.4% increase as the average hit £143,000. The report also reveals that London registered a record high, with the typical house priced at £496,000 in September.

British Land sells off retail properties amid crisis

Over £400m of British Land’s retail properties have been sold since the onset of the coronavirus crisis, while the group’s retail portfolio, which was valued at £3.2bn at the end of September, has lost 15% since the pandemic started. Underlying profit hit £107m, down 29.6%, while the company reinstated its dividend at 8.4p per share.


Inflation rises in October

UK inflation reached higher-than-expected levels in October after increases in the cost of clothing and food, with the Consumer Prices Index up to 0.7% from 0.5% a month earlier. Although this exceeded analysts’ forecast that inflation would remain flat at 0.5%, it still falls short of the Bank of England's (BoE) 2% target. Office for National Statistics figures show that the rising price of clothing and second-hand cars fuelled the increase, with the cost of food also up slightly. Jai Malhi, global market strategist at JPMorgan Asset Management, said consumers appear keen to continue spending and, with companies still struggling to operate at full capacity, “this would lead to a higher inflation rate than might be expected”. Paul Dales, an economist at Capital Economics, said the increase of the last two months showed inflation was “well past its low point” but would probably not increase far beyond the BoE’s 2% target during 2021.


BoE’s Haldane: Digital currencies could lower risk

Bank of England chief economist Andy Haldane believes risk in the financial system could be lessened by the use of digital currencies. He told TheCityUK’s annual conference that a “widely-used” digital currency could help manage record-low interest rates, saying it could provide a simpler way for rates to be levied on assets, mitigating against concern that lower rates would not be passed on to borrowers. Mr Haldane also noted that a shortfall of lending to SMEs could be addressed through the use of an open data platform that gave lenders more information on smaller firms, with banks often charging more for lending to entities they have less data on.

Bitcoin set for another surge

Analysts have predicted Bitcoin could climb even higher than the three-year high of over $18,000 it has now reached, with Naeem Aslam, chief market analyst at Avatrade, saying it is “only a matter of time” before Bitcoin hits an all-time high.

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