Lloyds criticised over fee increases
Lloyds Banking Group has been criticised over fee increases for business customers, with the monthly charge on its business extra account rising from £7.50 to £15 and the fee for its electronic business account climbing from £12.50 to £20. Tej Parikh, chief economist at the Institute of Directors, said: “This year many businesses will be tending to high debt piles and weak cashflow, and will want to avoid any incremental increase to their cost base. It is important that banks do not take advantage of the difficulties some firms face in switching accounts.” Kevin Hollinrake, co-chairman of the All-Party Parliamentary Group on Fair Business Banking, said: “Now is not the time to be doubling the cost of doing business.”
Barclays veteran recruited by Deutsche Bank
Senior Barclays banker Daniel Ross has been hired to head Deutsche Bank's investment banking division in the UK and Ireland, as the German firm continues to expand its advisory and consultancy services in the UK investment sector. Mr Ross is currently Barclays’ vice chairman for UK investment banking and its global head for media banking.
KKR snaps up John Laing
KKR has agreed a £2bn takeover of infrastructure firm John Laing, with a 403p-a-share cash bid marking a 27% premium on the price before the talks were confirmed. Under the deal, Equitix, the privately owned UK infrastructure fund, will take a 50% stake in John Laing's assets. Will Samuel, chairman of John Laing, said: "The offer from KKR represents an attractive and certain value in cash today, and reflects the high quality of the business, its people and future prospects, as well as providing a positive outcome for John Laing pensioners."
Orcel and Santander in court over job offer dispute
A hearing pitting Andrea Orcel against Santander over the withdrawal of an offer to make him chief executive began yesterday. Ana Botín, head of the Spanish bank, argued that UniCredit CEO Mr Orcel was not given a contract for the job. Mr Orcel, a former executive at UBS, argues he is owed by Santander over its decision to reverse its plan to appoint him in 2019. Mr Orcel has reportedly halved his claim for compensation from Santander from €112m to between €57.6m and €67.1m.
Icelandic raises key rate to 1%
Iceland's central bank has raised its key interest rate to 1% from 0.75% due to inflation pressure, saying inflation had been "higher and more persistent than previously forecast, measuring 4.6% in April". It added that it was opting to raise rates “in order to ensure that inflation expectations are anchored to the target."
Wells Fargo to start trading in Bitcoin
Wells Fargo is set to start trading in Bitcoin, introducing professionally-managed funds for its more wealthy clients despite recent steep falls in the cryptocurrency. In its The investment rationale for cryptocurrencies report, the Wells Fargo Investment Institute (WFII) said it views digital coins as an alternative investment. It said: “WFII believes that cryptocurrencies have gained stability and viability as assets, but the risks lead us to favour investment exposure only for qualified investors, and even then through professionally managed funds”.
EFG Hermes to acquire control of AIB
EFG Hermes Holding, Egypt's biggest investment bank, will acquire 51% of state-owned Arab Investment Bank (AIB). The Sovereign Fund of Egypt will also acquire a 25% stake in AIB, while the current owner, state-owned National Investment Bank, will retain 24%.
Trust Bank announces $680m fundraising
Russia's Trust Bank has raised some $680m from selling shares in state lender VTB.
Investors revolt over Pendragon bonuses
Car dealer Pendragon has been hit by a revolt from investors, with more than two fifths of votes at its AGM going against executive bonuses handed out during the pandemic. Leading investors including 13% shareholder Anders Hedin and Legal & General had questioned the company’s payment of a £413,000 bonus to chairman and chief executive Bill Berman, criticising the payout in a year when 1,800 jobs were cut and £52m was claimed in Government support. While 42% of shares were cast against the board’s remuneration report, 41% were cast against the re-election of Mike Wright, chairman of Pendragon’s remuneration committee.
FCA tells fintechs to flag risks to consumers
The Financial Conduct Authority (FCA) has written to more than 300 fintech start-ups, saying they must warn consumers about the risks of signing up to services not covered by the Financial Services Compensation Scheme. The City watchdog has told firms offering basic financial services of a concern that they are “not adequately disclosing the differences in protections between their services and traditional banking”. Giving the e-money firms six weeks to contact customers, the regulator said it is “concerned that firms are giving a potentially misleading impression to customers about the extent to which products or services are regulated by the FCA."
Aviva Investors fund to close
Aviva Investors has opted to close its UK property fund and its feeder vehicle funds, which have been suspended since March last year. The firm told investors that it had become "increasingly challenging" to generate positive returns from the fund while providing the necessary liquidity for the open-ended property vehicle. The fund has seen assets under management fall from a peak of £955m in April 2018 to its current £367m level. A strategic review of the fund, as well as Aviva Investors' redemption request assumptions, concluded that its “ability to fully benefit from the economies of scale and the diversification of investments that collective investment schemes normally bring would soon be limited”.
Ninety One sees increase in AUM despite outflows
Ninety One has seen its assets under management jump 27% in the year to the end of March despite seeing £200,000 in net outflows. The asset manager posted AUM of £131bn in March. Pre-tax profit increased 3% to £204m, and adjusted operating profit rose 9% to £206m. The firm has also signalled a final dividend of 6.7p per share which would result in a full year dividend of 12.6p per share.
LEISURE & HOSPITALITY
Marston's reports pre-tax loss of £105.5m
Pub chain Marston’s fell to a £105.5m pre-tax loss in the 26 weeks to April 3, with revenues during the six month period down £343.3m to £55.1m. Chief executive Ralph Findlay said: “Whilst still early days, trading has been encouraging since we were permitted to open our doors for outdoor trading last month.”
BAE Systems kicks off chairman search
Defence contractor BAE Systems has started the search for its next chairman, with Sir Roger Carr set to step down in 2023. With BAE having previously indicated that Sir Roger, who took the role in 2014, will retire at its annual meeting in 2023, board members have reportedly interviewed advisers about assisting a recruitment process that will be led by Chris Grigg, the arms manufacturer's senior independent director. It is noted that BAE's corporate governance framework makes long-term succession planning necessary.
MEDIA & ENTERTAINMENT
Advertising firm set for sale?
Lake Capital has reportedly hired bankers at Lazard to run a sale of advertising firm Engine Group. A spokesman commented: "We are exploring future options for Engine UK's growth and strategic direction; these could include a formal sale process or a third party investment."
House prices rise £24k in a year
Official figures show that the average UK house price has jumped by £24,000 in a year. The Office for National Statistics said prices rose 10.2% to £256,000 in the year to March 2021. March’s increase outpaces the 9.2% recorded in February and marks the fastest annual climb since August 2007. London saw the lowest annual price growth with a 3.7% increase, while Yorkshire and the Humber saw the biggest climb at 14%. Average house prices rose 10.2% in England, 11% in Wales, 10.6% in Scotland and 6% in Northern Ireland. The ONS said: “Changes in the tax paid on housing transactions may have allowed sellers to request higher prices as the buyers’ overall costs are reduced.”
Price surge set to continue
House price growth is set to continue across the UK with May prices expected to be 11.4% higher than where they were in the same month last year, according to Property Price Advice. The site saw valuation requests drop 29% below the four-year average in April. However, annual house price growth is forecast to reach 9.9% in June, and 10% in July. Transaction figures across England are also predicted to spike in May, June and July.
Boohoo pegs directors' bonuses to reform
Boohoo’s directors could be forced to give back part of their bonuses if they fail to implement changes under a programme to improve conditions for workers in its supply chain. The firm’s annual report and accounts show that 15% of bosses' bonuses for this year will be measured by the progress of the project, while the whole bonus could be scaled back if targets are not met.
Inflation doubles in April
Annual inflation more than doubled in April, data from the Office for National Statistics (ONS) shows. The increase to 1.5% in April from 0.7% in March means consumer prices are rising at their fastest rate since March 2020. The ONS said the increase was driven by sharp rises in domestic energy prices and transportation costs. Core inflation, which excludes energy prices and other volatile items, rose by 1.3% in the 12 months to April. ONS chief economist, Grant Fitzner, said: "Inflation rose in April, mainly due to prices rising this year compared with the falls seen at the start of the pandemic this time last year". The Bank of England recently said that UK inflation is heading above its 2% target and is expected to hit 2.5% at the end of 2021. Liz Martins, senior economist at HSBC, said that it looked like UK inflation would go above the Bank's 2% target, although this was "not too much of a worry for the Bank". "Their view is that they need to keep inflation sustainably around 2% two to three years out from now, so the short term overshoot won't worry them too much.”
No Bank dividend for the Treasury
The Bank of England will fail to pay a dividend to the Treasury after struggling to break even. Minutes of the February meeting of the Court of Directors show that the Treasury was “not expecting to receive a dividend this year” after the Bank’s loss-absorbing capital fell below a minimum threshold. The 326-year-old Bank has made a profit every year since independence in 1997. Erik Britton, a former Bank official who runs Fathom Consulting, said: “It was a point of pride that we were not beholden to the Treasury as we made a profit and paid the Treasury out of that profit. This feels like a symbolic moment.”