BoE to stress test banks on doomsday scenario
The Bank of England is to subject banks to a doomsday scenario that would involve further lockdown restrictions, with the test set to gauge reaction to a dive in consumer confidence and £800bn being wiped off the economy. Lenders including Lloyds, NatWest and Barclays will be tested to see how they could cope if the economy fell by 37% between 2020 and 2022, unemployment rose 12% and property prices plunged by a third, with Virgin Money to be involved in the test for the first time. The Bank said: “For the 2021 solvency stress test, banks will be expected to stress the airline and airline leasing sector as well as identifying their most significant sectorial cohort of coronavirus-related exposure under the stress”. The Bank will also use the stress tests to help assess the ability of banks to return to normal levels of shareholder dividends. Annual testing of risks to the banking system and its resilience to such challenges was paused in 2020, with officials and lenders instead focusing on the pandemic.
130k borrowers unable to cover mortgage costs
UK Finance figures show that around 130,000 homeowners in the UK are unable to pay their monthly mortgage costs. The analysis shows that around eight in ten of the 1.9m homeowners who took a mortgage holiday as a result of the coronavirus pandemic are once again making full repayments. However, around one in 84 are still relying on repayment holidays. UK Finance’s Eric Leenders said that while it “will always be in the long-term interest” of borrowers to resume making payments as soon as they are able to, ongoing support will be available for anyone still struggling.
Low-deposit mortgages return
Moneyfacts analysis shows that low-deposit mortgages have made a return, with many products for buyers with a 10% deposit having been pulled last year on the back of coronavirus-driven uncertainty. The report shows that there were 44 deals available for those with 10% of the property’s value in September, with this now climbing to 197. Deals for those whose deposit covers 15% of the value have also increased.
Monzo founder to leave
Monzo founder Tom Blomfield is to leave the digital bank following a struggle with his mental health. He said that he has not enjoyed working for Monzo in the two years since it transformed from a "scrappy start-up" into a “really important UK bank”, adding that the pandemic has made these feelings worse. Mr Blomfield moved from CEO to the president last May, standing down from the board at the same time.
BlackRock most popular fund house of 2020
Figures from Morningstar estimate that £23.5bn was invested in BlackRock’s UK-based funds in 2020, making it the most popular fund house of the year. The figure was nearly four times the amount pumped into the next most popular asset manager, Link Group.
Morgan Stanley sees record profits
Morgan Stanley’s profits rose to a record high in Q4, with net income climbing to $3.39bn compared to $2.24bn a year before. Annual profits came in at $11bn, exceeding the record $9bn posted last year. Revenues rose around 26% to $13.64bn while its investment banking division saw revenues jump 46% to $2.3bn.
Vauxhall chief executive appointed
Former Nissan executive Paul Wilcox has been named new chief executive of Vauxhall, part of the newly-formed Stellantis group.
Airlines look to land more support
Representatives from aviation trade bodies are seeking short-term financial relief for airports and airlines. Airlines UK chief executive Tim Alderslade said: “With the lockdown, travel ban and now mandatory pre-departure testing, UK airlines start 2021 having taken one step forwards and two steps back”, while Airport Operators’ Association chief executive Karen Dee said a “lack of comprehensive support” for aviation from ministers is “effectively tying one of the UK’s hands behind its back”, saying the economic recovery “will be more difficult and take longer.”
IAG negotiates Air Europa discount
British Airways owner IAG has announced that it will pay €500m for budget carrier Air Europa, a reduction from the €1m agreed a little over a year ago.
Business volumes climb in Q4
Business volumes in UK financial services grew for the first time in two years during Q4, according to the latest Financial Services Survey. It was found that firms expect business volumes to grow at a slightly quicker rate in the first three months of 2021. They also expect to cut headcount this year, while the shift toward remote working is prompting many firms to consider redefining, reconfiguring or cutting existing office space. The report, published by the CBI, was completed before the latest lookdown restrictions were rolled out, with CBI chief economist Rain Newton-Smith saying: “Unfortunately, the health and economic picture has sadly deteriorated since with restrictions tightening again”.
Half of firms submit regulatory reporting on new system
The Financial Conduct Authority (FCA) says half of firms who previously submitted their regulatory reporting on Gabriel are now using the City watchdog’s new data system, RegData. The FCA started moving firms over to the new system in October 2020, with their moving dates determined by the nature of their reporting obligations and schedules. The new platform is part of a larger overhaul of the FCA’s data and digital strategy.
Unilever promises living wage to its supply chain
Unilever has pledged that every worker in its supply chain will earn the living wage by 2030, saying it will require its direct suppliers to pay staff a local living wage that allows "workers to participate fully in their communities and help break the cycle of poverty". All of Unilever's direct 155,000 employees are paid a living wage but the company said it wanted to "secure the same for more people beyond our workforce”.
MEDIA AND ENTERTAINMENT
CMA launches algorithm investigation
The Competition and Markets Authority (CMA) has launched an investigation into algorithms used by large tech firms, with the probe to consider whether software used by companies such as Google, Facebook and Amazon is hurting consumers by, among other things, limiting choice and bumping up prices. The CMA has warned that consumers could be "manipulated" into buying specific items, as search results favour certain brands.
Sky in minority worker pledge
Sky has pledged that one in five of its staff will be from a minority-ethnic background by 2025 and guarantee that at least 5% of employees in its 25,000-strong UK and Ireland workforce are black. The move to increase the proportion of minority employees, which could see 1,500 more black, Asian and minority ethnic workers being hired, comes after a study found Sky's workforce was not representative of the areas where it operates.
Pearson sees positive sales figures
Education group Pearson has announced a return to sales growth in the fourth quarter, with a 5.5% increase recorded. The firm said £50m of cost savings were expected this year, with its balance sheet showing net debt of just £0.5bn and liquidity of £1.9bn.
S4 Capital acquires production studio
Production studio Staud Studios, which specialises in the automotive industry, has been acquired by S4 Capital.
House prices hit new high
UK house prices have hit a record high, with Land Registry data showing the average price rose to £250,000 in November. Property values rose 7.6% in the year to November, with this marking the steepest annual price growth since June 2016. Across UK nations, England saw values climb 7.6% year-on-year in November, reaching £267,000; the average in Scotland rose 8.6% to £166,000; Wales saw growth of 7%, taking the typical value to £180,000; while Northern Ireland’s 2.4% increase took its average to £143,000. Analysts believe the stamp duty holiday has helped drive the market and push up prices, warning that the market and growth may slow once the tax break ends on March 31.
Building delays mean buyers may miss tax break
The National Federation of Builders has warned that more than 16,000 homebuyers could miss out on stamp duty savings because the coronavirus crisis has forced developers to slow down their building projects. It notes that delays are stretching to up to two months, meaning buyers of new build homes hoping to complete before the stamp duty holiday ends on March 31 could miss the deadline and lose out on savings worth up to £15,000. The federation has backed calls for the cut-off for the tax break to be extended.
IWG takes £160m hit on coronavirus crisis
Office provider IWG is to make further provision for up to £160m for network rationalisation, with this in addition to a £156m hit it took back in August. IWG said the £160m combined with cost cutting could see a cost benefit arising in the range of £325m to £375m.
WH Smith losing £20m per month due to lockdown
WH Smith said that it expects to lose up to £20m in cash per month until March due to the latest round of coronavirus lockdowns. Sales from its travel business for the 20 weeks to January 16 stood at 37% of the levels during the same period in 2019, and at 87% at its high street business, leading to overall sales standing at 59% of the same period 12 months earlier.
Burberry’s sales slip
Burberry has reported a 9% decline in Q3 same-store sales. In the three months to December 26, retail revenue fell to £688m, from £729m a year earlier. Like-for-like sales rose 11% in Asia Pacific, driven by strong growth in mainland China and Korea. However, revenue was down 8% in the Americas and 37% in Europe and the Middle East, reflecting both lower tourist demand and higher levels of store closures. The firm said 15% of outlets are closed, while 36% are subject to reduced opening hours and other restrictions.
English Football League seeks BoE lifeline
The English Football League is reportedly in talks to borrow about £75m through the Bank of England's Covid Corporate Financing Facility, while private lenders are also vying to provide finance to the body.
Inflation doubles in December
Figures from the Office for National Statistics show that UK inflation doubled in December, with prices up 0.6% on December 2019. This compares with a 0.3% annual increase recorded in November. The Consumer Prices Index grew by 0.3% month-on-month after a 0.1% fall in November. The increase came despite food and drink prices falling, with rising prices for clothing, transport and cultural activities pushing inflation higher.