BIS: Private sector crypto against the public good
The Bank for International Settlements (BIS) has again hit out at private sector cryptocurrencies and stablecoins, particularly bitcoin, arguing that they are “speculative assets rather than money, and in many cases are used to facilitate money laundering, ransomware attacks and other financial crimes”. However, the Swiss-based bank for the world’s central banks did say that accelerating plans for rival digital coins supported by central banks could offer “finality, liquidity and integrity” and “form the backbone of a highly efficient new digital payment system”. The BIS insisted: “Central banks stand at the centre of a rapid transformation of the financial sector and the payment system.” However, “Innovations such as cryptocurrencies, stablecoins and the walled garden ecosystems of big techs all tend to work against the public good element that underpins the payment system.”
BoE wants to make it easier to block takeovers of British lenders
Bank of England deputy governor Sam Woods is to call on the Treasury and Parliament to change takeover rules so institutions attempting to acquire a British lender would have to satisfy authorities that they are suitable. This used to be the case, but the EU changed the rules in 2009 forcing regulators to prove that a bank's prospective new owner was not right for the job. Woods told the Treasury select committee the rule change would "strengthen our arm and strengthen the culture around how these 'change of control' decisions are made."
One in seven people have no savings at all
Research carried out for Yorkshire Building Society reveals that approximately one in five adults in the UK have less than £100 in savings. One in seven people have no savings to fall back on at all and more than a quarter have less than £500 put away. Tina Hughes, director of savings at Yorkshire Building Society, said: “This research continues to highlight just how fragile many people’s finances are.” However, on a positive note, 17% of people surveyed have reduced their outstanding debt during the pandemic.
Lloyds and Halifax branch closures announced
Over 40 Lloyds and Halifax bank branches are to shut, with Vim Maru, retail director at Lloyds Banking Group, stating that: “We've... seen our digital banking customers grow by over 4m in five years, to almost 18m, of which 13.6m also choose to be active app users. This means that, like many businesses on the high street, we must change for a future where branches will be used in a different way, and visited less often."
Dimon snubs London on European trip over quarantine rules
As frustration over Britain’s quarantine rules grows, Jamie Dimon, the CEO of JP Morgan has said he will not be visiting the US bank's London headquarters during his upcoming trip to Europe. He will be attending Emmanuel Macron’s “Choose France” event at the Palace of Versailles on June 28th, however, where the French president is seeking to lure global banks away from the City.
Private equity reaping pandemic windfall
Private equity firms are reaping the benefits of the financial assistance they gave their portfolio companies during the crisis months of the pandemic, Peter Garnry, analyst and head of equity strategy at Saxo Bank, says, with the sector up 27% this year. “Credibly benign financial conditions are also helping private equity firms to leverage their balance sheets. However, it is not all without
risks as investors are paying the most on record for listed private equity,” he continued. “It should not be a big surprise given the low interest rate environment and benign funding conditions for private equity firms, although on the downside the competition for deals has gone up significantly,” Garnry added.
Private equity bid for Morrisons prompts calls for government intervention
The Labour party has urged the government to intervene in any private equity takeover of supermarket chain Morrisons, following a £5.5bn takeover bid for the retailer from Clayton, Dubilier & Rice (CD&R). Opposition MP Seema Malhotra commented: "There are really worrying examples of companies including private equity firms loading businesses with debt, stripping them for parts and leaving with the rewards."
Ireland to sell stake in Bank of Ireland
Ireland is planning a “phased exit” of its stake in Bank of Ireland, finance minister Paschal Donohoe has said, announcing that part of the state’s 13.9% shareholding will be sold off over the next six months or so.
ECB bank dividend cap could be lifted
European Central Bank vice-president Luis de Guindos has announced that a restriction on bank dividend payments could soon be lifted. He remarked:
"If the pace of activity we are forecasting continues, clearly this recommendation will sooner or later disappear."
Climate plan required of EU lenders
A report from the European Banking Authority (EBA) is calling for banks in the EU to develop a 10-year plan for dealing with environmental, social and governance (ESG) risks.
Electric cars could soon be as cheap as petrol and diesel ones
Transport minister Rachel Maclean has said the cost of electric vehicles is coming down all the time, citing analysis suggesting they will reach parity with conventional cars as early as 2025. Ms Maclean said the Government was examining a “zero-emissions vehicle mandate” to boost sales.
CMA action leads to Persimmon and Aviva refunds
Persimmon Homes and insurer Aviva are to offer refunds after the Competition and Markets Authority alleged that leasehold homeowners and prospective buyers had been misled. Andrea Coscelli, chief executive of the regulator, commented: “It is good that Aviva and Persimmon have responded positively to this investigation, enabling these issues to be fixed for leaseholders. But our work isn’t done. We now expect other housing developers and investors to follow the lead of Aviva and Persimmon. If not, they can expect to face legal action."
Berkeley reports pre-tax profit of £518m
Housebuilder Berkeley has posted a pre-tax profit of £518m for the year to April, with revenue up 14.7% to £2.2bn.
City 'held back' by Brussels protectionism
Investment minister Lord Grimstone has warned of "significant protectionism" facing the City as Brussels bids to attract business from Britain's financial services sector. Lord Grimstone's comments come a day after the EU's financial services commissioner Mairead McGuiness said the EU needed to "reinforce its capacity" after Brexit. Lord Grimstone said the Government was determined to "generate more opportunities for the financial sector and services in general" through trade deals. While noting that "pretty resilient" financial services firms had maintained export growth despite the pandemic, he added: "The UK has an extremely strong offer, but we must remember that protectionism does not only arise in areas like agriculture, or manufacturing. There is also significant protectionism in services, which is holding back our exporters."
LCF collapse: MPs want change of culture at FCA
The Financial Conduct Authority (FCA) needs a change of culture and more agility to prevent a repeat of the London Capital and Finance (LCF) saga, MPs on the Treasury Committee have said. Dame Elizabeth Gloster's review of the saga found that the FCA failed to "effectively supervise and regulate" LCF before its collapse. Mel Stride, who chairs the Treasury Committee, said: "The collapse of LCF is one of the largest conduct regulatory failures in decades." The committee has suggested that the FCA needs to set a clear date for completing changes that will move its culture on and enable it to act as a more proactive and agile regulator.
Outside the US, London remains world's most important fintech hub
London remains the second most active city in the world for fintech, according to the 2021 Global Fintech Rankings, behind San Francisco. The Index compiled by Findexable ranks the fintech ecosystems of more than 264 cities across 83 countries. It found that although London remains Europe’s most important fintech space, a range of UK cities outside the capital are developing into thriving fintech hubs. “The UK continues to be a major player in fintech, but unlike the larger finance sector it is moving away from being largely London-based,” said Findexable’s founder and CEO Simon Hardie.
Future GSK plans announced
GlaxoSmithKline is to retain a stake in its consumer health division after spinning off the business, chief executive Emma Walmsley has revealed. This follows pressure from investors to present a vision of what the company will look like after the consumer division is spun off. Dame Emma said cuts to dividends would help fund massive investment in drug development with £33bn in turnover sought within a decade.
Dialysis company sets funding record
Quanta Dialysis Technologies has raised $245m in what is said to be the largest private fundraising in the industry in Europe. The British medical technology company plans to expand in the UK and United States, where it received regulatory clearance in December.
LEISURE & HOSPITALITY
Royal Opera House loses £500,000 battle over tax
The Royal Opera House in Covent Garden has lost a lengthy legal battle over the recovery of £532,069 in VAT from HMRC, which bosses believed they could deduct from spending on catering supplies, including champagne and food for the venue's restaurants and bars. The Royal Opera House won its case in the initial tribunal but lost on appeal, and the Court of Appeal judges have now dismissed its challenge to that decision.
MEDIA & ENTERTAINMENT
Ofcom could soon apply to video-on-demand services
Streaming services such as Netflix, Amazon Prime and Disney+ are set to be regulated by Ofcom as part of an attempt to “level the playing field” for public service broadcasters such as the BBC and ITV. Culture Secretary Oliver Dowden has unveiled plans for a broadcasting white paper that would see a ban on streaming unjustified harmful and offensive content and using “surreptitious” product placement to promote brands during shows. Mandatory age ratings and strengthened parental controls could also be introduced. Under the Government plans, Ofcom would be able to rule on complaints over bias and inaccuracy in shows streamed by on-demand services.
Small businesses exempt from junk food advertising ban
A Government ban on paid-for junk food advertising online and before the 9pm television watershed will not apply to small businesses, Whitehall sources have said. It follows concerns raised earlier this year that small high street outlets could be prevented from drumming up business by posting images of products such as cakes and pastries on their social media accounts.
Brunswick agrees to sell stake to US fund run by Buffett’s banker
Brunswick has agreed to sell a 10.7% stake to Chicago-based BDT Capital Partners. The move values the public relations group at about £500m and triggers a £70m payout for its chair Sir Alan Parker.
Aegon to shut Property Income fund
Aegon Asset Management is to close its property income fund and property income feeder funds following a number of redemption requests and a struggle to raise liquidity. The £381m fund was the first in the UK direct property sector to suspend last March after market turmoil from the coronavirus crisis made it impossible to determine the value of its underlying assets. The move comes just a month after Aviva Investors called time on its £367m property fund.
UK inflationary pressures hit record highs as economic activity rebounds
A closely watched survey has revealed that cost pressures on UK businesses rose at the fastest rate for 13 years, while inflation of prices charged by firms hit its highest since records began in 1999. The IHS Markit/CIPS Composite Purchasing Managers' Index (PMI) gave a reading of 61.7, based on initial readings for June, down only slightly from 62.9 last month. Any figure above 50 indicates expansion. "Businesses are reporting an ongoing surge in demand in June as the economy reopens, led by the hospitality sector," said Chris Williamson, chief business economist at IHS Markit. Rhys Herbert, senior economist at Lloyds Bank, said that while the data pointed to a “strong ongoing recovery” overall, worker shortages, supply chain disruption and rising cost pressures were “starting to hold back output”. Concerns over rising inflation come after annual consumer price growth hit a two-year high of 2.1% in the year to May. The Bank of England's Monetary Policy Committee (MPC) is set to announce its latest interest rate-setting decision today.
New £50 note launches
The Bank of England has launched a new £50 note featuring the face of computer science pioneer Alan Turing. Old, paper £50 banknotes are no longer being produced, and will be withdrawn from circulation by the end of September 2022.
UK anti-money laundering expert convicted of laundering cash
Dominic James Edward Thorncroft, an anti-money laundering expert and former chair of the Association of UK Payment Institutions, has been convicted of laundering the proceeds of an investment scam worth £850,000.