Sunak to cut tax on banks to keep City competitive
Several papers pick up on reports that Rishi Sunak is planning to cut the surcharge on bank profits 8% to 3% in his Budget next week. Oscar Williams-Grut, the City editor at the Evening Standard, said it’s the right thing to do, arguing that finance “was totally overlooked in Brexit negotiations and has found itself worse off as a result.” The Chancellor will say in his Budget that the UK is the only global financial centre to place an extra surcharge on the banking sector and that it should be slashed. The cut will come into effect in April 2023 - the same month corporation tax is due to rise from 19% to 25%. Without the reduction to the surcharge the total tax rate on profits will hit 33%. The Guardian cites John McDonnell, the former shadow chancellor, who was left unimpressed by the news: “Sunak talked about morality in his conference speech, where's the morality in cutting universal credit forcing more children into poverty whilst reducing the taxes on wealthy banks? Appalling judgement.”
Green strategy could leave thousands unable to sell
The Government’s Net Zero Strategy plans would force mortgage lenders to keep data on the energy efficiency of the homes they lent money against, report this to the Government and set themselves targets to improve how well-insulated the homes on their books were. The move could leave some homeowners facing costly energy efficiency improvements if they want to sell their properties, experts say. Sarah Coles, personal finance analyst at Hargreaves Lansdown, said it is “likely to get much harder to track down a cheap mortgage for an inefficient property, which will make them more difficult to sell, which in turn is likely to bring down their value.” A spokesman for Boris Johnson said: “We have consulted on setting requirements for mortgage lenders to support homeowners to improve the energy performance of their homes. The aim of that is to catalyse the development of a green finance market and make available affordable finance.”
Metro Bank lending stalls on weak mortgage activity
Metro Bank’s lending stalled during the third quarter of the year, driven by a weak performance in the high street lender’s mortgage business. The bank, known for its 24/7 hour branches, registered £12.3bn in loans at the end of September, down slightly from the previous quarter. The contraction in lending was generated by shrinking lower yielding mortgages. Deposits rose 5% year-on-year but fell 1% on the previous quarter to £16.4bn as it switched away from high-cost fixed term towards growth in current account and instant access balances. “We are seeing signs of a gradual return to normality and have adopted a hybrid way of working for office-based colleagues", said chief executive Daniel Frumkin. “We remain focused on executing on our plans and returning the bank to sustainable profitable growth".
Rishi Sunak to extend Covid recovery loan scheme
As the UK economy loses impetus the Chancellor is reportedly considering a six-month extension of the Government’s recovery loan scheme that had been due to end on December 31st. The scheme provides credit worth up to £10m and comes with an 80% government guarantee for lenders. However, terms are less generous than previous pandemic loan schemes with lenders able to ask for personal guarantees from directors and fees are payable from the start. The recovery loan scheme was launched in April as a bridge between the more generous coronavirus loan schemes and more normal credit conditions.
Lloyds to close nearly 50 more branches
Lloyds Banking Group has announced the closure of 41 Lloyds Bank and seven Halifax branches early next year, adding to 100 already shutting or shut in 2021. Vim Maru, retail director for Lloyds Banking Group, said: “Like many other businesses, we’ve seen people using our branches less frequently in recent years, and this decline is continuing.” But Sharon Graham, Unite General Secretary accused the lender of “a complete betrayal of the communities and staff who have long supported this highly profitable business.”
MPs question FCA over NatWest money laundering case
The chair of the Treasury Select Committee has asked the Financial Conduct Authority to explain why it took five years to secure a prosecution against NatWest for breaching money laundering rules. Earlier this month the lender admitted three counts of failing to properly monitor £365m deposited into a customer’s account. Mel Stride said: “I am interested in better understanding the reasons why it has taken five years after the police raid in 2016 to bring this case to a successful conclusion.”
Blackstone pays $1.2bn for Spanx
Blackstone has bought Spanx, the shapewear maker, in a deal valuing the business at $1.2bn. Founder Sara Blakely will remain a "significant" shareholder, become executive chairman and lead an all-female board of directors.
Handelsbanken expects lower personnel costs
Handelsbanken said on Wednesday that it expects lower personnel expenses in coming quarters having cut staff and branches, but faces rising investment in on-line services. The Swedish lender beat third-quarter profit forecasts and announced a strategic exit from Denmark and Finland but analysts said underlying costs "continued to disappoint".
Brussels to delay decision on how to classify nuclear power for green finance
The EU has delayed the introduction of sustainable finance rules amid concerns over energy costs and pressure to stamp out greenwashing in the investment industry.
Balfour borrows industry’s largest sustainable linked loan
Balfour Beatty has agreed a £375m loan facility to help the construction firm drive down carbon emissions, generate social value and progress with other ESG practices. The financing represents the industry's largest sustainable linked loan.
Scottish Investment Trust to merge with JP Morgan
Scottish Investment Trust is to combine assets with JP Morgan’s Global Growth & Income (JGGI) arm to create a new £1.2bn enlarged trust. The move will see Scottish Investment Trust voluntarily liquidated through a scheme of reconstruction with the new trust taking on the JGGI name. Scottish Investment Trust said the merger represented “the most compelling outcome” for its shareholders, who will own shares in JGGI on a formula asset value basis, according to the plans.
BNPL regulation expected soon
Government proposals on how to regulate the Buy Now, Pay Later market are expected by the end of October, according to industry insiders. The BNPL industry was recently estimated to have financed £3bn in customer transactions in the UK alone and the FCA is now moving to ensure consumers are protected.
PayPal in talks with Pinterest on takeover worth $45bn
Online payments company PayPal has offered $45bn for social media group Pinterest, equivalent to $70 a share. Pinterest has recently been deepening its push into ecommerce with new shopping tools.
UK manufacturers call for long-term strategy for industry
UK manufacturers are calling on the Government to develop a long-term strategy for industry as it faces soaring energy costs and demands to cut carbon emissions. Lobby groups representing the country’s five leading industries said more government financial support to boost capital investment in R&D as well as new factories and equipment is required.
MEDIA & ENTERTAINMENT
UK competition watchdog fines Facebook £50m over Giphy deal
The Competition and Markets Authority has fined Facebook £50.5m for a “major breach” of an order relating to its 2020 purchase of video file search engine Giphy.
Average UK house price jumps by £25,000 in a year
Property values in the UK increased by 10.6% over the year to August 2021, up from 8.5% in July, according to the Office for National Statistics. The average house price was £264,000 in August 2021, £25,000 higher than the same time last year. The average house price in Scotland increased by 16.9% to a record high of £181,000. In England, average house prices increased 9.8% over the year to £281,000, in Wales to £195,000 (a 12.5% rise) and in Northern Ireland to £153,000 (9.0%). Although the stamp duty savings, which artificially inflated the market, may have disappeared, there is still a shortage of supply and looming interest rate rises are likely to continue to spur buyers.
Cost of living rise slowed in September
Inflation fell slightly last month with the Consumer Prices Index reading 3.1% - down from 3.2% in August. The dip was partly due to lower prices in the hospitality sector, the Office for National Statistics said, while higher prices for transport were the biggest contributor to overall price rises. However, price pressure is expected to accelerate markedly over the coming months as rising energy bills push the headline rate above 4%. Food prices will also rise in response to higher manufacturing costs. Markets are now pricing in a 15 basis point interest rate rise to 0.25% when the Bank of England’s Monetary Policy Committee next meets on November 4th.
Only 3% of small businesses measure carbon footprint
Just 3% of the UK’s small businesses have measured their carbon footprint in the last five years and set an emissions reduction target, according to a survey by the British Business Bank. Small businesses are responsible for nearly a third of the country’s greenhouse gases, but the Bank’s CEO Catherine Lewis La Torre says more than half say they’re not ready to prioritise decarbonisation. However, she points out that 11% of companies have taken loans to fund moves to net zero, while 22% said they are open to doing so. Funding businesses’ transition to net zero is an opportunity for external finance providers, she adds.