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Daily News Roundup: Thursday, 23rd November 2023

Posted: 23rd November 2023

BANKING

Government considers selling NatWest shares to public

The UK Government is considering selling some of its remaining shares in NatWest to the general public, according to Chancellor Jeremy Hunt. The Treasury currently owns 39% of the bank after a bailout during the 2008 financial crisis. Hunt mentioned the possibility of a retail share offer, similar to the privatisations of the 1980s, when shares in British Gas were sold to the public. NatWest's share price has fallen by almost a third since January. One City veteran said a discount of up to 10% would be needed to encourage enough demand.

HSBC shares fall after RBC downgrades stock

Shares in HSBC fell as much as 1.8% on Wednesday after RBC downgraded the stock, citing a $5bn headwind from falling interest rates. RBC noted that HSBC had outperformed its UK peers by 31% this year but suggested that now was a good time to cash out. The broker predicted that lower rates would pose a “material headwind” of around $5bn over the next two years but would be offset by balance sheet growth. RBC added that the shares now looked “more fair value” and lowered its price target. Lloyds and NatWest shares also ticked down after RBC noted a valuation gap between the stocks.

Monzo launches new cashback feature

Digital bank Monzo has launched a new cashback feature, allowing customers to earn between 2 and 10% on purchases from everyday merchants. Some retailers are offering even more cashback. The feature gives customers real-time visibility on their rewards and alerts them to new offers based on their spending habits. Kunal Malani, general manager at Monzo, said that the cashback offering fills a gap in the market by providing a simple redemption process and cashback on brands people truly love.

Barclays to shut another 16 branches

Barclays bank will be closing an extra 16 branches by the end of March 2024, meaning more than a third of its in-person facilities across the UK would be shut down since the start of this calendar year. Barclays is closing almost 200 bank branches across 2023 and 2024, according to MoneySavingExpert.  

OBR expects mortgage rates to stay high

The Office for Budget Responsibility (OBR) predicts that mortgage rates will remain high for the next six years, with the average rate in 2025 forecasted to be 5%. This contrasts with the just under 4% rate that it predicted eight months ago.

PRIVATE EQUITY

Civica sold to Blackstone in £2bn takeover

British software developer Civica has been acquired by US private equity giant Blackstone in a £2bn takeover. Civica, which provides software to local councils and the NHS, was sold by its current owner, Partners Group. The deal marks one of Blackstone's largest UK acquisitions and continues the trend of US companies buying British firms. Civica was founded in 2001 and was previously listed on the London stock market before being sold to private equity firm 3i in 2008.

INTERNATIONAL

Eurozone banks seeing an increase in loan defaults and late repayments

The European Central Bank has warned that lenders were beginning to see “early signs of strain” across balance sheets, fuelled by an increase in loan defaults and late repayments. ECB vice-president Luis de Guindos said demand for loans was “cooling exceptionally quickly” while losses were starting to rise from historic lows. The ECB's twice yearly Financial Stability Review also warned that shadow banks face the risk of receiving large margin calls or client redemptions they cannot meet because they do not have enough cash on hand.

ANZ warns of bonus cuts if staff work from home too much

Banking giant ANZ has warned staff that their bonuses could be affected if they do not spend enough time in the office. ANZ and other firms requested that employees spend at least 50% of their working time in the office. ANZ managers recently sent a note to over 40,000 employees reaffirming this expectation and explaining that office attendance could impact pay.

AUTOMOTIVE

Nissan to build new electric cars in UK

Japanese carmaker Nissan is set to announce that it will manufacture new versions of its electric Qashqai and Juke cars in the UK. The decision will secure thousands of jobs at Nissan's factory in Sunderland, which currently produces existing models of the Qashqai and Juke, as well as the Nissan Leaf. The UK government has provided a significant funding guarantee, although it is unclear if taxpayer funds will be made available upfront.

UK’s predicted take-up of electric cars slashed by almost half

Britain has downgraded its forecasts for the take-up of electric cars over the next seven years due to higher energy prices and soaring interest rates. The latest forecast from the Office for Budget Responsibility, released alongside the Chancellor's Autumn Statement, said that just 38% of new vehicles sold in the UK in 2027 would be electric, down from the 67% it predicted in March.

FINANCIAL SERVICES

Council pension funds pushed to take more risk

The UK Government plans to double the allocation of riskier assets in local authority pension plans to stimulate growth, potentially unlocking £30bn in funding. The Chancellor on Wednesday outlined guidance for The Local Government Pension Scheme to allocate 10% of its investments towards UK start-ups. Jeremy Hunt also announced the creation of a fund run by the British Business Bank to invest in high-growth companies. Mr Hunt also revealed plans to loosen Solvency II rules to make it easier for pension funds to invest in higher-risk assets.

LEISURE & HOSPITALITY

Alcohol duty frozen, tobacco prices soar

Beer, wine and spirits drinkers had something to cheer from the autumn statement after a freeze in alcohol duty until next summer but people who smoke roll-up cigarettes will see the price of a packet soar. The chancellor was expected to announce a rise in alcohol duty, which would have been the second increase in four months after reforms this August saw the cost of most wines and spirits rise. However, following intense lobbying by the pub and drinks industries, Jeremy Hunt said there would be no further increase until August 1, 2024, a delay that will cost the Treasury £310m.

MANUFACTURING

Big firms welcome permanent tax breaks for investment

Jeremy Hunt's announcement of permanent tax breaks for investment has been welcomed by Stephen Phipson, the chief executive of the manufacturing lobby group MakeUK, who said it was a “pretty historic move” and “a real vote of confidence in the manufacturing sector”. However, the tax break is only relevant to the 1% of UK businesses that have capital expenditure in excess of £1m. The Government also announced measures to speed up planning approvals and grid connections to further encourage investments. Overall, the announcement aims to bolster business confidence and stimulate growth in sectors like green technologies, renewable energy, and advanced manufacturing.

RETAIL

Kingfisher issues second profit warning as sales slump

A second profit warning has been issued by Kingfisher, the owner of B&Q and Screwfix, as quarterly sales continue to decline. The company's pre-tax profits are expected to be £30m lower than previously forecast, with full-year profits estimated at £560m. The disappointing outlook is attributed to weak retail markets in France and delayed sales in insulation, plumbing, and heating. Kingfisher's sales dropped by 3.9% to £3.2bn in the three months to October 31, with French sales down 8.6% and UK sales up 1.1%. 

ECONOMY

OBR slashes growth forecasts

The Office for Budget Responsibility has said the UK economy will grow much more slowly than expected in the next two years with living standards not expected to return to pre-pandemic levels until 2027-28. According to the watchdog, the UK will grow by 0.6% this year. This is an improvement on previous expectations of 0.2% growth, but the OBR slashed its outlook for the longer term. It expects the economy to grow by 0.7% in 2024 and 1.4% in 2025 - down from a previous forecast of 1.8% and 2.5%. GDP will rise 2% and 1.7% in 2027 and 2028 respectively, the OBR believes. The OBR also raised its forecasts for inflation, estimating a fall to 2.8% next year from its current level of 4.6%.

OTHER

BoE’s bond buying programme to cost taxpayers £126bn

The Office for Budget Responsibility said on Wednesday that the estimated losses on the Bank of England’s bond buying scheme have doubled since July to £126bn. Deutsche Bank said last week that the Bank could potentially save taxpayers £15bn a year if it stopped actively selling gilts.

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