Metro fined £5.4m over reporting failures
Metro Bank has been fined £5.4m for accounting errors that forced the bank to raise £375m from its shareholders to shore up its balance sheet. In January 2019 Metro disclosed errors in its accounting treatment of professional buy-to-let loans and loans secured by commercial mortgages. The mistakes went back to May 2016 and meant that Metro had to increase its risk-weighted assets by £900m and was not holding enough capital. The Bank of England’s Prudential Regulation Authority (PRA) said it had levied the penalty on Metro for “failing to act with due skill, care and diligence” in the regulatory reporting of its capital position and for shortcomings in its governance and controls.
Knaresborough to get new banking 'hub'
The North Yorkshire town of Knaresborough, which currently has no bank, is to become one of the first places in the UK to get a new "banking hub" in a scheme offering basic cash services on high streets. The proposed hub would see the major banks offer their services on different days of the week. It would be set up by the Access to Cash Action Group (ACAG), which is part of the banking services trade body UK Finance. The town's Conservative MP Andrew Jones said: "This is great news for Knaresborough, a town starved of its banking facilities. I am sure this new facility will be well-used by residents, businesses and visitors."
Large banks face growing tax bill
Data from HMRC show large UK banks face a potential £8.5bn tax liability as of 31 March 2021, up 26% from £6.2bn. The figures, obtained by DLA Piper, refer to tax under consideration, which covers all taxes, including Corporation Tax, VAT, PAYE, and National Insurance contributions.
Santander’s defeat in Orcel case a blow to reputation
Santander plans to challenge the ruling by a Madrid judge that the bank pay Andrea Orcel €68m for withdrawing its offer to make him CEO. Legal experts believe there is little scope to overturn the main finding that an offer letter sent to Orcel was legally binding. Moreover, observers say the ruling highlighted potential flaws in the way Santander is run. "It is not a good ruling in terms of corporate governance [...] and my concern is how this ruling is going to affect investors' perception of governance," said Jose Carlos Diez, an associate professor of economics at the University of Alcala de Henares.
Commerzbank says state support boosted restructuring efforts
The CEO of Commerzbank, Manfred Knof, has admitted that state support for the lender had bolstered progress with restructuring but government support should eventually end.
BNP Paribas lays down markers of its investment banking ambitions
The FT charts the efforts of BNP to improve its investment banking offering over the course of the pandemic, a pursuit executives say is designed to keep the bank relevant to corporate clients.
Automotive output falls 28.7%
Data from the Society of Motor Manufacturers and Traders (SMMT) show automotive output declined 28.7% in November to 75,756 units produced. “These are incredibly worrying figures, underscoring the severity of situation facing the automotive industry,” SMMT's chief executive Mike Hawes said. “Covid is impacting supply chains massively, causing global shortages – especially of semiconductors which is likely to affect the sector throughout next year. With an increasingly negative economic backdrop, rising inflation and Covid resurgent home and abroad, the circumstances are the toughest in decades.”
Wizz Air buys Gatwick landing slots
Wizz Air has acquired 15 pairs of take-off and landing slots at Gatwick airport from Norwegian, which abandoned its long-haul flights and retreated to Europe when the pandemic struck. “Acquiring airport slots at Gatwick airport will enable us to enhance our presence and competitive position in the London market,” said Jozsef Varadi, chief executive of Wizz.
Taylor Wimpey to abolish costly leasehold clauses
Taylor Wimpey has agreed to abolish ground rents that double every 10 years following a crackdown by the Competition and Markets Authority. The housebuilder will instead charge a flat fee. Taylor Wimpey had voluntarily given formal commitments to remove the terms from leasehold contracts and exclude them from new contracts, the CMA said.
Sensible regulation can bring a return to commercial freedom
Shearman & Sterling partner Barnabas Reynolds welcomes moves by the UK Government to pull away from the EU’s code-based regulatory system for financial services and says giving regulators more power to make the rules will “allow regulation to be more agile and thoughtful, focusing on management of financial risk.” However, writing in the Telegraph, Mr Reynolds says that UK regulators must operate more fully under the law in order to benefit fully from a return to Britain’s traditional legal method. This should result in high standards but fewer, more focussed rules. Additionally, enforcement actions should be reviewed by a court before any penalty is applied. This will render moot the relationship building we see between firms and regulators. “It is only through the law that commercial freedom arises, “ Barnabas asserts, and with courts verifying that basic legal controls have been observed, “discipline will ripple through the system to beneficial effect.”
UK regulator fines BlueCrest Capital £40m for ‘reckless’ conduct
BlueCrest Capital Management has been fined more than £40m by the Financial Conduct Authority for “reckless” conduct in failing to manage a conflict of interest affecting its investors. The penalty centres on alleged shortcomings in the way the former hedge fund handled the movement of its traders between an external fund for outside investors and an internal vehicle that managed the personal wealth of its staff and partners.
Only a third of UK-based active equity funds outperform passives
Research by investment platform AJ Bell reveals that only 34% of active equity funds in the UK outperformed a passive alternative in their respective sector this year.
Novartis buys UK gene therapy specialist
Gene therapy start-up Gyroscope, which develops treatments for eye conditions including age-related macular degeneration, has been sold to the Swiss drugmaker Novartis for around £1.1bn. Gyroscope was founded five and a half years ago by Syncona in partnership with academics at four UK universities.
MEDIA & ENTERTAINMENT
Reach faces action over pension fund deficit
The Pensions Regulator has been asked to intervene after the publisher of the Daily Mirror and the Express rejected demands from trustees of its retirement scheme to make larger contributions to address a substantial funding deficit. The trustee, chaired by pensions professional Joanna Matthews, said it had proposed additional contributions to the scheme from Reach, “which we believe the company can easily afford”. Reach reported in July that the overall accounting deficit for its pension schemes had declined to less than £120m.
Land Securities acquires further stake in Bluewater shopping centre
Land Securities has acquired a further 25% stake in Bluewater shopping centre, paying £172m to Lendlease, the Australian developer that has been hunting for a buyer for some time. The deal values the mall at £688m which is nearly 70% below the £2.2bn that it was deemed to be worth in 2015.
Economy grew at slower pace than first thought in third quarter
The UK economy grew at a slower pace than first estimated between July and September, according to revised figures from the Office for National Statistics. During the quarter before Omicron took hold, the economy grew by 1.1%, the ONS said, rather than 1.3%. It blamed weaker consumer spending, and the impact of energy companies going out of business. However, the decline in output compared with the final quarter of 2019, before the pandemic, was revised to 1.5%, smaller than the 2.1% expected because of upward revisions to growth in 2020.