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Daily News Roundup: Thursday, 21st April 2022

Posted: 21st April 2022

BTG Advisory

End of eviction moratorium opens door to unresolved rent disputes

Daniel Djanogly of BTG Advisory says that the expiry of a moratorium on commercial tenant evictions due to non-payment of rent during the pandemic has opened a two-year backlog of unresolved rental debt disputes. He notes that the Government’s temporary eviction moratorium created an unresolved stockpile of unpaid rental arrears which must now be settled. Mr Djanogly highlights that the end of the eviction moratorium was timed with the Royal Assent of the Commercial Rent (Coronavirus) Act, which aims to resolve outstanding commercial rent disputes through an efficient, affordable and legally binding arbitration procedure. He suggests that landlords and tenants will not want rental arrears to end in arbitration, positioning both sides in favour of a settlement. The system, he adds, is designed to encourage settlement and to keep disputes out of the courts. Mr Djanogly goes on to look at how under the new legislation, arbitrators are responsible for making legally binding awards on rent debt relief for businesses negatively affected by business disruption during the coronavirus crisis.


‘More British’ rule-making may deliver cheaper mortgages

The Bank of England is poised to unlock cheaper mortgages by introducing a "more British style of rule-making.” Pledging to use its post-Brexit freedoms, the Bank is set to axe overly expensive and onerous rules that make it hard for small banks to offer cheap home loans. The Telegraph’s Tim Wallace says officials are abandoning the “top-down approach to regulation that was beloved of Brussels,” saying that under the EU, watchdogs were given a strict set of rules and ordered to follow them closely, with no room for interpretation. Sam Woods, head of the Bank’s Prudential Regulation Authority (PRA), said that the proposals "will enable us to adopt a more British style of rule-making, with less fine detail in legislation and more ability for us to maintain and develop a coherent and dynamic rulebook". Setting out the Bank’s annual business plans, Mr Woods said it is already developing a simpler regime for smaller banks, “which will be good both for safety and soundness and for competition.” These reforms could deliver a fall in costs that challenger banks face when issuing mortgages, cutting prices and boosting competition. Investec analyst Ian Gordon said the current regime forces banks into niche or higher risk products, warning that it is “uneconomic for a challenger bank to operate in the standard vanilla mortgage market.” Anne Boden, founder and chief executive of Starling Bank, said: “The PRA is taking the right steps to improve competition by simplifying the regime for small banks.”

Rees-Mogg urges MPs to ease capital requirements for banks

Jacob Rees-Mogg says the UK must consider easing requirements on how much capital banks need to hold in reserve in order to survive economic shocks. Telling MPs that the Government “ought to look” at easing the capital requirements for the banking sector that were brought in after the financial crisis, the Brexit Opportunities Minister said: “We need to free up financial services so they can be as competitive as historically they were.” With City Minister John Glen already having announced that Solvency II – which makes insurance firms hold a certain amount of capital – would be eased to increase investment in the British economy, Mr Rees-Mogg said he believes the Treasury should consider easing similar regulations for the banking sector.


Oaktree-backed 17Capital raises almost $3bn for first credit fund

Oaktree Capital-backed 17Capital has raised $2.9bn for its first credit fund, It will lend money to private equity funds and is targeting a yield of up to 9%.


Credit Suisse: Legal costs will hit Q1 figures

Credit Suisse has announced it is likely to report a first-quarter loss due to a jump in legal costs. The Swiss lender said it would be putting aside an extra SwFr600m (£485m) after “developments in a number of previously disclosed legal matters.” Credit Suisse also told investors on Wednesday that its financial results would be knocked back by a further SwFr200m because of its exposure to Russia after the invasion of Ukraine. The lender said the losses it had suffered in the quarter would be partially offset by a recovery in provisions of about SwFr170m from Archegos, as well as by property gains of about SwFr160m. Analysts at Jefferies said that based on Credit Suisse’s latest disclosure its underlying pre-tax profits “could land anywhere between zero and SwFr900m”.

ECB could increase interest rates in Q3

European Central Bank (ECB) policymaker Joachim Nagel, president of Germany's Bundesbank, says the ECB could end its bond purchases at the end of June and raise interest rates at the start of Q3 as it looks to tackle surging inflation. With inflation in the euro zone hitting 7.5% last month, Mr Nagel said: “The numbers speak for themselves … The return to our medium-term target of around 2% is becoming more and more unlikely."


Ministers urged to legalise driverless vehicles

Alex Kendall, co-founder and chief executive of self-driving technology company Wayve, has called on the Government to introduce primary legislation that legalises fully driverless vehicles in the UK. He claims that the company’s autonomous vehicle technology is scalable from city to city and adaptable from passenger cars to delivery vans. Mr Kendall says big businesses are already recognising the potential of AV technology, noting Wayve has signed commercial partnerships with Ocado Group, Asda and DPD.


Housebuilder Stewart Milne up for sale

Housebuilder Stewart Milne Group is being put up for sale, with this tying in with the retirement of founder Stewart Milne. The firm, which has a workforce of about 1,000, posted turnover of almost £270m in the 12 months to October 2020 and completed more than 830 homes in that period.


FCA amends diversity rules

The Financial Conduct Authority (FCA) has published rules designed to boost representation across London-listed firms. The watchdog has opted not to set mandatory quotas, instead asking companies to either comply or explain why they failed to reach the targets. Benchmarks set out by the regulator are for at least 40% of the board to be women, at least one of the senior board positions to be a woman and at least one member of the board to be from an ethnic minority background. The FCA has amended the terminology in its diversity rules to allow listed companies to include those self-identifying as women in its reporting and enable firms to choose whether they use sex or gender as the basis for reporting on workplace diversity. The FCA plans to review the rules in three years’ time to make sure they are working and to check if the diversity targets are still appropriate.

BoE to tackle crypto risks

The Bank of England is expanding its budget by £24.3m as it seeks to tackle risks associated with crypto assets. The Prudential Regulation Authority (PRA) will require firms to report their crypto asset exposures and future plans and will engage with international partners, including the Basel Committee on Banking Supervision, to develop crypto exposure rules for financial institutions. The PRA said it was expanding its 1,341-strong workforce in response to "new policy responsibilities" that included setting the UK's own rules after Brexit.

FCA names interim digital asset lead

The Financial Conduct Authority (FCA) has appointed Victoria McLoughlin as interim head of a new unit focusing on digital assets. Ms McLoughlin, who previously led the FCA's supervision of Virtual Asset Service Providers and crypto asset firms, said her role as interim lead will involve creating a “new regulatory regime to deliver UK Government's vision for crypto whilst managing risks arising.” She added that the new FCA department will “shape the future of financial services and deliver good outcomes for consumers, markets and firms.”


GSK workers vote to strike over below inflation pay rise

A number of GlaxoSmithKline workers have voted to go on strike, having rejected a below inflation pay rise. Unite members voted 86% in favour of strike action.


Scottish shop sales return to pre-pandemic levels

Shop sales in Scotland have returned to pre-pandemic levels, figures from the Scottish Retail Consortium (SRC) show. Total sales in March were 0.6% up on March 2019, with the SRC noting that this was in part due to rising prices, rather than increased sales volumes. March's figures showed overall food sales increased by 6%, compared with the same period three years ago, while the non-food category was down by 3.9%.

Amazon European retail arm paid no taxes on €51bn of sales

Amazon's European retail arm paid no income tax and received €1bn (£830m) in tax credits last year after reporting €1.2bn of losses in 2021. The Luxembourg-based unit posted sales of €51.3bn last year, up 17% from the €43.8bn recorded in 2020. The firm was not legally required to pay taxes because it made a loss after investing heavily in European jobs and infrastructure.


Energy costs could prove catastrophic for many households

Several bodies have urged the Government to increase support amid concern that many people will be unable to pay bills as energy costs soar. Adam Scorer, chief executive of fuel poverty charity National Energy Action, told Radio 4's Today that the situation marks “a catastrophe for many households on the lowest income,” calling for ministers to act as “the scale of this problem is beyond what the energy companies can do.” With E.On’s CEO telling the Business, Energy and Industrial Strategy Committee that at least 40% of its customers will go into fuel poverty as prices rise this year and Scottish Power’s boss saying this autumn would be "horrific" for poor customers, Torsten Bell of the Resolution Foundation think-tank said energy bosses were right to focus people on "the catastrophe coming this autumn.” Liberal Democrat energy spokesperson Wera Hobhouse said it is “now or never for the Government to step in,” while Labour's Ed Miliband said it was "shameful” that the Prime Minister and Chancellor “are refusing to support the British people facing a cost of living crisis."

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