JP Morgan investors concerned over UK digital bank
Shareholders in JP Morgan are reportedly concerned over plans to start a digital banking business in the UK. The US lender made its entrance into the British retail banking market in September when it launched Chase. However, it is understood that there are concerns among JP Morgan investors as it has provided little detail about its ambitions for the British consumer business. The bank has not disclosed the number of customers that the Chase brand has attracted since launch nor said how much it has spent developing the project. The concerns form part of wider investor worries about the US bank’s plan to ramp up spending on technology and other projects by almost a third to nearly $15bn this year. The majority - $12bn - will go on technology, the Wall Street bank said in January. The Times notes that JP Morgan faces mounting competition from fast-growing fintechs such as Stripe, the privately-owned payments business that was last year valued at $95bn.
Lloyds to close 60 branches
Lloyds Banking Group has said it will close 60 of its branches, which will include 24 Lloyds Bank sites, 19 Bank of Scotland locations and 17 Halifax branches. The Unite union said the announcement would result in 124 job losses, which a Lloyds spokesperson did not deny but said the company was making efforts to offer employees jobs in other locations. Vim Maru, group retail director of Lloyds Banking Group said: "Just like many other high street businesses, fewer customers are choosing to visit our branches. Our branch network is an important way for us to support our customers, but we need to adapt to the significant growth in customers choosing to do most of their everyday banking online."
Apple acquires UK open banking startup
UK open banking startup Credit Kudos has been acquired by Apple as it increases its drive into the payments space. The US tech firm closed the deal with Credit Kudos this week, marking its first move into the UK open banking space, according to reports. City A.M. notes that the acquisition accelerates Apple's move into payments after the tech giant announced a new Tap to Pay feature on the iPhone to be introduced later this year which will allow merchants to pay via technology payments firm Block. The firm also offers the Apple Cash card for digital peer-to-peer payments and is working on a service for Apple Pay that offers a buy-now pay-later style service.
Bankers’ bonuses drive pay growth higher
The Office for Budget Responsibility says end-of-year rewards in the financial sector will jump 20% year-on-year in 2021-22, driving pay growth higher. Top investment bankers at HSBC took home an average bonus of £596,000 each last year, on top of their £479,000 average salary. NatWest bankers shared £298m for 2021, while the Barclays bonus pool hit £1.9bn.
NatWest investors get say on climate
NatWest shareholders will be given a vote on the bank's climate policy for the first time at its annual meeting next month. The Times reports that investors will be asked to back the policy and its intention to publish a transition plan to align with Paris Agreement climate goals.
CVC examining Telecom Italia reorganisation
CVC is understood to be examining the reorganisation that is taking place at Telecom Italia (TIM). Italy's largest telecoms group has already received an approach from KKR about a €10.8bn potential offer, according to reports. CVC is thought to be interested in the services arm of TIM once a plan to split the phone group's network from the rest of the business was completed.
ING ends financing for new oil and gas projects
ING Groep’s energy chief has said the bank will no longer finance new oil and gas projects. "Decarbonisation of the energy system ... is of almost existential importance, but so is affordable energy and reliable supply of energy," Michiel de Haan said. "We can make the decision to discontinue our involvement in new greenfields, but we (will) continue our existing involvement in oil and gas across the world because we need to meet those other two targets."
Wall Street bonuses soared to record high last year
The average Wall Street bonus hit a record high of $257,500 last year after banks raked in huge profits from record levels of deal-making and trading activity. But the New York State Comptroller, Thomas DiNapoli, said "sluggish” and “uneven” markets so far in 2022 would probably drive near-term profitability and bonuses lower this year.
City remains Europe's leading finance hub
The City of London has retained its crown as Europe's dominant financial centre, coming second only to New York in the latest global financial centres index published by think tank Z/Yen Group. The City comfortably beat rival European centres including Paris, Frankfurt and Amsterdam, which respectively came 11th, 16th and 19th. However, the gap between London and New York has grown since September while the capital’s fintech offering has fallen behind Beijing and San Francisco. The report from Z/Yen said: "London's regulatory environment, anti-corruption regime and rule of law is reasonably good. However, the financial services industry and its regulation needs to move to focus more on the perspectives of individual consumers and beneficial owners of money/assets than on the providers of services."
US activist urges TP ICAP to sell
Phase 2 Partners, a US hedge fund led by investor Justin Hughes, has urged the board of TP ICAP to sell the UK interdealer broker after a 45% decline in its share price over the past year. A spokesman for TP ICAP in response said the company was maintaining an active dialogue with its investors and is “focused on delivering value to shareholders.”
LEISURE & HOSPITALITY
Hospitality bosses criticise Chancellor for neglecting sector with VAT hike
Hospitality bosses have claimed the Chancellor has not done enough to support pubs and restaurants after ignoring their calls for a VAT freeze. The sector had been lobbying for the tax to remain at 12.5% instead of returning to its pre-pandemic level of 20%. Nick Mackenzie, chief executive of Greene King, said: “Coupled with rising prices across the supply chain, and disproportionately high business rates, [Wednesday’s] VAT hike is a missed opportunity for the industry and puts at risk the ability of UK pubs to fully recover from the pandemic, create jobs and support the wider economy.” UKHospitality boss Kate Nicholls called the measures a “real setback” for businesses still struggling to keep their head above water after various lockdowns.
House prices will jump £20k this year
UK house prices will increase by £20,000 by the end of the year, the Government's official forecaster has predicted. High demand and strong household savings mean property prices will climb a further 7.4% in 2022, according to the Office for Budget Responsibility. This means the average home will cost £295,350 by the end of this year. The OBR has more than doubled its house price forecasts for this year, as the property boom continues for longer than expected. The 7.4% prediction in the forecaster's spring economic and fiscal outlook was an increase of 4.2 percentage points compared to its October report. Six months ago, it had forecast growth in 2022 of 3.2%. This would have meant a cash increase in 2022 of £8,800. Now, it expects homeowners will make 130% more from their properties than previously suggested.
Nestlé suspending non-essential Russia sales
Nestlé is to pull popular brands such as KitKat and Nesquik out of Russia but will continue to sell "essential" food products, following criticism from Ukrainian politicians. Nestlé said: "As the war rages in Ukraine, our activities in Russia will focus on providing essential food - not on making a profit. We are fully complying with all international sanctions on Russia." President Volodymyr Zelensky, on Saturday, criticised Nestlé for still conducting business in Russia, while the Prime Minister, Denys Shmyhal, tweeted that Nestlé boss Mark Schneider "shows no understanding".
Record-breaking fall in living standards expected this year
Real household income will fall by 2.2% this year, the largest fall in a single year since records began in 1956, the Office for Budget Responsibility warned yesterday. The OBR said inflation could rise by as much as 8.7% by the end of the year while growth forecasts have been cut for this year from 6% to 3.8%. Using a forecast of future energy prices, its first since the Russian invasion of Ukraine, the OBR now expects the price cap on energy bills to rise by a further £830 in October to hit around £2,800 a year. The fiscal watchdog also pointed out that the pay of Britain’s highest earners has risen dramatically during the pandemic, while pay for those on the lowest incomes has fallen sharply. Average pay for those who earn below the personal allowance has fallen 10.3% over the past two years and pay for basic rate taxpayers has risen by just 4.4%. But pay among higher-rate taxpayers has risen by 21%, and among additional-rate taxpayers has risen by 23.3%.
Inflation hits 30-year high after rising 6.2% in a year
The Office for National Statistics said the consumer price index rose at an annual rate of 6.2% in February, up from 5.5% in January. This means UK inflation has now risen to a 30-year high with the recent surge driven by soaring global prices for energy, petrol, food and durable goods. Grant Fitzner, chief economist at the ONS, said: “Inflation rose steeply in February as prices increased for a wide range of goods and services.” Jack Leslie, senior economist at the Resolution Foundation, said February’s figures were “a foretaste of the huge income squeeze coming”, which would be a “complete disaster for living standards”.