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Daily News Roundup: Thursday, 24th December 2020

Posted: 24th December 2020

BANKING

Lenders cautious about awarding large bonuses

Banks are currently weighing bonuses for the year and with investment banking revenues enjoying a bumper 2020 due to the market volatility brought on by the pandemic, some traders are thought to be in line for bonus rises of between 10% and 20%. But with all the devastation Covid has wrought global economies, executives are aware that the sight of bankers taking home giant bonus cheques after would be unpalatable, the Telegraph’s Lucy Burton states. Michaela Rosbrook of Mayfair-based headhunter Wessex Partners, says: “We have heard from our clients in the US that they are facing pressure not to be seen to pay excessive bonuses coming out of 2020 given the broader economic backdrop.” Some banks are introducing alternative awards, such as time off or childcare benefits, in an effort to allay public anger.

PRIVATE EQUITY

Interview: Beringea CIO

City AM carries an interview with Karen McCormick, chief investment officer of Beringea. The venture capital firm, which primarily invests in and around Series A, had an impressive year, investing in everything from esports to ESG firms, but Beringea was not immune to the impact of the pandemic. “We did a slew of deals in Q1 … a lot of the diligence was done before we locked down… But we had a bit of a COVID shock in Q2 and we were all wringing our hands and pulling our hair out,” McCormick says. “Most companies in Q2 and at the beginning of Q3 just didn’t raise. They either managed to trade through or they raised from the existing investors,” McCormick recalls.

Private equity dealmaking defies pandemic to hit post-crisis high

Private equity deals worth $559bn were struck worldwide in 2020, according to figures from Refinitiv, almost a fifth higher than the previous year’s total and the highest value since 2007.

Dyal Capital and Owl Rock agree $12.5bn Spac tie-up

Dyal Capital and Owl Rock have agreed to combine in a deal to take them public via a special purpose acquisition company named Altimar Acquisition Corporation, set up by HPS Investment Partners.

INTERNATIONAL

Goldman Sachs to offer digital wealth management to US investors

Goldman Sachs has begun internal testing of a digital wealth management service for the masses, as it continues its push into the mainstream consumer market. Employees who sign on to the digital service, called Marcus Invest, will pay an annual management fee of 0.15%, according to reports.

European ETF investors pull $7.8bn from S&P 500 funds

European ETF investors switched away from funds tracking the S&P 500 this year and have been focussing instead on the tech-heavy Nasdaq 100 and a blend of sector and “sustainable” indices.

AUTOMOTIVE

South Korean investor eyes up McLaren HQ

Korea Investment & Securities and Knight Frank Investment Management are in advanced talks to buy McLaren’s headquarters in Woking, Surrey, for more than £200m in a sale-and-leaseback deal.

AVIATION

easyJet strips non-EU shareholders of voting rights

  1. Union rules mean airlines in the bloc must be majority-owned by EU investors, and so with only 47% of its stock owned by European investors, easyJet is set to strip British and other shareholders of their voting rights to avoid breaching the regulations. Investors backed the plan at the company’s AGM on Wednesday. However, 42% of shareholders, including the airline’s founder and biggest shareholder, Stelios Haji-Ioannou, voted against the re-election of easyJet’s directors.

FINANCIAL SERVICES

City needs to put business creators at the centre of its model

Daniel Pinto, the founder and chief executive of Stanhope Capital Group, writes in the Telegraph that the City is taken for granted by both the Government and those within it who have failed over the last four years to “come up with a single new idea to preserve their own future.” Pinto goes on to recommend a three-pronged strategy to maintaining the City’s leadership: aggressively pursue global business and encourage dual listings; make the UK regulatory framework more flexible and thirdly, turn London into the capital of venture funding for fast-growing businesses. Additionally, tax breaks and simplified administrative procedures could be offered to lure entrepreneurs. Pinto concludes: “The City can be a vector for substantial economic growth and positive change but for this, it needs to undergo a kind of cultural revolution.”

SEC approves NYSE direct listing plan

The Securities and Exchange Commission has said that start-ups will no longer have to pay large underwriting fees to Wall Street banks when they raise money on the NYSE. "This innovation democratises investor access and provides companies with another path to go public," said NYSE president Stacey Cunningham. Under NYSE’s plan, when stock changes hands once trading commences, new shares will get priority over secondary ones. This will give companies a better chance at reaching their fundraising goals.

ASA bans Klarna’s Instagram ad

The Advertising Standards Agency (ASA) has banned several Klarna shopping adverts that appeared on Instagram and encouraged consumers to use Klarna to shop and ‘boost their mood’. The ASA has banned Klarna’s Instagram campaign from appearing again, and warned the influencers involved to not “irresponsibly” encourage the use of Klarna’s deferred payment service. The Swedish fintech has 9m users in the US, and has more than 1.2m active monthly users worldwide.

At least £1bn laundered through UK money transfer businesses annually

The National Crime Agency has revealed that criminals are using money transfer businesses to launder at least £1bn in cash every year. Intelligence has suggested that about 15% of more than 31,000 outlets are exposed to money laundering from groups involved in human trafficking, importing drugs and other crimes, the Times reports.

HEALTHCARE

Oxford AstraZeneca vaccine ‘could get approval within days’

John Bell, Regius Professor of Medicine at Oxford University, has said that Oxford AstraZeneca vaccine ‘could get approval within days’. The Medicines and Healthcare products Regulatory Agency is examining the vaccine developed by Oxford University and pharmaceutical giant AstraZeneca. Prof Bell said: “I would expect some news pretty shortly, I doubt we will make Christmas now but just after Christmas I would expect. And I have no concerns whatsoever, the data looks better than ever.”

LEISURE & HOSPITALITY

Whitbread asks landlords to cut rent bill

Whitbread, which owns brands including Premier Inn and Beefeater, has asked landlords to cut its rent bill in half as its struggles with the impact of the pandemic. The UK’s largest hotel and restaurant group called for the three-month reduction as thousands of rooms sit empty. Only a quarter of rooms in Whitbread’s 800 hotels were occupied in November. The group has scrapped its shareholder dividend, furloughed 27,000 staff, and warned it could cut 6,000 jobs. Unlike many of its peers, Whitbread has, until now, paid its rent in full since the pandemic began.

Marston’s saves Brains

Marston’s will operate 156 Brains pubs in Wales, saving the Cardiff-based brand amid COVID-19 difficulties. Brains’ chairman John Rhys said the decision had not been taken “lightly” but that the deal would secure 1,300 jobs. Marston’s will begin charging rent in April 2021. The 141 pubs which Marston’s will hold the freehold on directly made an adjusted pre-COVID profit of £14m, with Marston’s to charge annual rent of £5.5m across the estate.

MEDIA & ENTERTAINMENT

Google CEO criticises antitrust regulation

Google CEO Sundar Pichai has warned that “regulation can get it wrong” as his firm is increasingly targeted by antitrust moves. Last week, the European Commission set out new regulation to curb the power of big tech. The Digital Services Act hopes to increase transparency and competition for tech firms. In an interview with the FT, Pichai said: “I think it’s an important regulation to think through and get right.” However, he warned that “Governments need to think through these important principles. Sometimes we can design very open ecosystems, they can have security implications.” He added that the failure of GDPR to break down the monopoly of big tech “shows that for a lot of these things, the answers are nuanced, and regulation can get it wrong.”

REAL ESTATE

British Land agrees sale of West End offices

British Land has agreed a 75% stake sale in three buildings in the West End to Allianz Real Estate for £401m. The portfolio includes three buildings; 10 Portman Square, Marble Arch House and York House, all of which are in Marylebone. As a result of the sale British Land will form a new joint venture with Allianz, with British Land’s interest at 25% and Allianz’s at 75%. British Land will continue to manage all three buildings and will receive an asset management fee.

ECONOMY

Haldane: Bank must have 'laser focus' on inflation

The BoE’s chief economist Andy Haldane has said that the central bank must have a “laser focus” on keeping inflation expectations in check once the COVID-19 crisis eases. Mr Haldane said: “The last thing the world needs right now is a nasty inflation surprise,” echoing comments he made on November 28. The BoE said on December 17 it is prepared to let inflation overshoot its 2% target temporarily. Mr Haldane told warned any overshoot could not become entrenched otherwise bond yields would rise, pushing up the cost of repayments on Britain’s £2trn debt mountain and jeopardising any recovery. He also said he was much more confident about the economy in the second half of 2021 than in the first quarter of the year because of the prospects for rolling out COVID-19 vaccines.

Brexit deal will boost UK economy

With a Brexit deal reportedly on the brink of being finalised, economists say an agreement will spur a surge of investment and lead to a bounceback for the economy. Sterling is expected to rise 6% if a deal is confirmed while fund managers are predicting a rally in equities, which have long been devalued by Brexit uncertainty.

OTHER

OECD warns against using pension assets for ‘pet projects’

Governments have been warned by the OECD to avoid using private pension assets on frivolous projects as states increasingly encourage providers to invest in projects that can fuel a recovery.

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