BANKING
Banks told to get ready for smart direct debits
The UK's nine biggest banks and building societies have been told by the Competition and Markets Authority (CMA) to be prepared to implement smart direct debits, also known as variable recurring payments (VRP)s by July. The lenders now have until July to have completed the testing phase of VRPs but it's still not clear exactly when consumers will be able to start using the new technology. Victor Trokoudes, CEO and co-founder of investment app Plum, said: “While direct debit is currently the most feasible way for automated deposits, we're looking forward to being able to add variable recurring payments.” He added: “It's really important that we as an industry still apply pressure to the Open Banking system, to help ensure that innovation and improvements continue for the benefit of consumers.”
Metro Bank’s losses narrow as it attempts to draw line under scandal
UK challenger Metro Bank reported a pre-tax loss of £245.1m for last year, compared with a loss of £311.4m in 2020. The loss includes a £5.4m fine imposed by the Prudential Regulation Authority in December relating to failings in its financial reporting between 2016 and 2019. An investigation into the issue by the Financial Conduct Authority is ongoing and the bank has put aside £5.3m for any potential fine. Revenues rose 17% to £39.9m following a recovery in consumer activity. Commenting on the results, CEO Daniel Frumkin said: “Two years into the turnaround, our strategy is delivering meaningful results as we move towards profitability.”
Barclays’ quarterly profit surges as dealmaking boosts investment bank
Barclays has posted a larger-than-expected jump in annual profits after being able to release some of the credit provisions it took at the height of the pandemic. The bank said its pre-tax profits last year climbed to £8.4bn from £3.1bn in 2020 – better than the £8.1bn forecast by City analysts due to a net impairment release of £700m. The bank was also buoyed by record profits of £5.8bn at its investment banking division and announced a £1bn share buyback, as well as 4p-a-share dividend. Barclays also increased its bonus pool for 2021 by almost a quarter to £1.9bn.
Co-operative Bank renews consolidation bid
The Co-operative Bank has appointed PJT Partners to help scrutinise potential takeover targets, Sky News reports. The move comes within months of the bank having a £1bn takeover bid for TSB rejected by its owner, the Spanish group Sabadell. Analysts are predicting a strong performance when the Co-op reports today.
AUTOMOTIVE
Rising debt costs hamper Aston’s turnaround
Aston Martin has reported an 80% increase in revenues to £1.1bn after the popularity of its DBX sports utility vehicles boosted sales. However, although pre-tax losses more than halved to £214m, interest on debt has soared to £117m and is expected to rise to £170m this year. The company has experienced delays delivering the £2.5m Valkyrie hypercar with the sports car maker blaming the slow roll out on the project’s complexity. Billionaire owner Lawrence Stroll says his turnaround plan for the car maker will take three more years to succeed.
Mini factory suspends production due to chip shortage
Mini has halted production at its factory in Oxford due to a shortage of semiconductors. The BMW-owned car-maker said its Cowley factory will remain closed up to and including Friday to allow for adjustments in its production schedule. BMW has been prioritising computer chips for its luxury brands such as Rolls-Royce amid a boom in demand from wealthy customers during the pandemic.
Stellantis posts record profits
Vauxhall owner Stellantis posted record annual profits last year despite producing 1.6m fewer cars than planned due to the semiconductor shortage. The group reported sales of €152bn while net profit almost tripled to €13.4bn.
FINANCIAL SERVICES
IMF: Brexit must not threaten standards
The International Monetary Fund has said the UK should not deviate too far from its commitment to high standards of prudence and good governance when revising rules for financial services. The IMF report also suggested that Britain maintain its commitment to mutual cooperation with the EU on regulatory matters. In conclusion, the fund said the UK operates a well-functioning financial stability framework and had resilient banks and insurers and was currently well aligned with global standards.
Peel Hunt warns over deals slowdown in UK
Shares in Peel Hunt were down 13% after the British broker warned that full-year earnings were expected to come in below analyst expectations. Investor sentiment had been hit by inflation fears and geopolitical tensions, Peel Hunt said. “The backdrop for capital markets activity has been particularly challenging,” the London-listed company said in a statement. However, it expected to still post record revenues for its investment banking division as it continues to enjoy a rise in corporate clients.
FCA brings in consultants to tackle authorisation backlog
The Financial Conduct Authority has revealed that it has hired consultants to help it tackle the backlog in new authorisations. Sheldon Mills, executive director of the FCA, told the Treasury Committee that the watchdog had brought in help while it continues to recruit permanent staff. “We have put in place measures both to recruit - we have consultants helping us while we are recruiting - and to get through some of that backlog,” Mills said.
LEISURE & HOSPITALITY
Gousto raises further investment
Gousto has raised a further $230m in an investment round led by SoftBank Vision Fund 2 and backed by Fidelity International, Grosvenor Food & AgTech and Railpen, formerly known as the Railway Pensions scheme.
RETAIL
Boots sets bid deadline
Boots has set a deadline of midnight for suitors to submit first bids for the company. US private equity group Bain Capital is among those to have made an offer while the billionaire Issa brothers are also eyeing a bid alongside their private equity backers, TDR Capital. Others circling also include US investment firms Sycamore Partners, Advent and Apollo. Boots, which is part of US giant Walgreens Boots Alliance, has struggled through the pandemic, losing £258m in the year to August 31 and cutting thousands of jobs.
Ted Baker bouncing back after pandemic
Ted Baker has revealed that sales increased by 35% in the 12 weeks to January 29 compared with the previous year, despite the Omicron variant denting shopper footfall.
SPORT
Private equity groups line up for €1.5bn French football deal
CVC Capital Partners, Hellman & Friedman, Silver Lake and Oaktree Capital are lining up formal bids for a €1.5bn deal with France’s Ligue 1 as the league attempts to shore up its finances.
ECONOMY
Sunak should consider raising taxes on rich to dampen inflation - IMF
The International Monetary Fund has advised Chancellor Rishi Sunak to consider raising taxes on those "who have benefited most from the pandemic" as part of Britain’s efforts to limit the risk of persistently high inflation. In its annual assessment of the UK economy, the fund said the rationale for targeting the better-off would be to shift spending by those "most likely to consume" to the future. The report said key indicators such as wage hikes, price plans by companies, and expectations for inflation shown by surveys and implied by markets all "flashed red at present". The IMF backed the idea of the Bank of England steadily increasing interest rates to 1-1.5% to help bring inflation back to its 2% target over the next couple of years but suggested bringing forward a planned tightening of fiscal policy from the 2023/24 financial year to 2022/23 could tamp inflationary pressures while reducing the potential drag on growth later.
Bailey: Hold down prices to help battle inflation
Bank of England Governor Andrew Bailey has told companies to hold down prices to help Britain battle inflation. If companies demand higher prices and workers seek higher wages to compensate, inflation is likely to become more embedded in the economy, Bailey told MPs on the Treasury select committee. Bailey was attempting to explain remarks he made earlier this month when he called for the “moderation” of pay rises to mitigate rampant price growth. “It is not just wage-setting, it is also price-setting. It is also company margins. I want to make clear that it is both,” Mr Bailey said, calling for “thought and restraint”. Inflation has already hit 5.5% and the Bank expects it to peak in April at 7.25%, almost four times the Bank’s 2% target.