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Daily News Roundup: Thursday, 24th September 2020

Posted: 24th September 2020

BANKING

City of London abandons plans for widespread return to office

A raft of City companies have halted plans to bring staff back into the office, including HSBC and Goldman Sachs. Thousands who had been brought back will now revert to working from home after Boris Johnson reversed guidance on returning to offices. The FT’s Lombard says the City of London risks being permanently damaged by the atomisation that comes with coronavirus restrictions. The Times cites Catherine McGuinness, policy chairwoman of the City of London Corporation, who comments: “We are disappointed at the blanket call for office workers to return to working from home where possible. Firms have taken huge steps to make sure that their offices are Covid-secure. It’s clear that this virus isn’t going to go away quickly so we need to find a way of living with it that doesn’t cripple our economy.”

FCA drops probe into BoE ‘audio hack’

The Financial Conduct Authority has closed its probe into Encoded Media, a small UK technology company accused of misusing the Bank of England’s market-sensitive press conference feed, without taking further action. The Bank of England has conceded that it could have acted faster to identify the security breach. The Bank has now set out a series of its own recommendations for future conduct including maintaining a "detailed" inventory of third-party IT equipment on site, subject to security reviews. The Times’ Philip Aldrick argues that the Bank was “complacent” and “arrogant” about the risks and had been “outsmarted by spivs”.

Virgin Money bags biggest prize in UK banking scheme

Virgin Money has received a £35m award from the Capability and Innovation Fund which the lender said was “an endorsement of the group’s potential to shake up SME banking and a vote of confidence in our ability to invest in new capabilities”. MarketFinance and trade finance group Ebury both picked up £10m each while previous awardee ClearBank scored an additional £25m for its joint bid with SME banking app Tide.

JP Morgan acts on Brexit concerns

JP Morgan Chase & Co is planning to complete the migration of €200bn its UK assets to a Frankfurt-based subsidiary by 2021, after hundreds of its UK-based staff were told they should plan to move out of London amid fears that a satisfactory deal with the EU will not be reached by the end of the year. Other lenders such as UBS, Standard Chartered and Citi have previously undertaken moves to bolster their operations in Frankfurt.

PRIVATE EQUITY

Private equity’s risky cheap debt move

An editorial in the FT says private equity firms are loading their companies with debt to fund dividends, a move that hurts their reputation just when economies need private capital to help them recover.

INTERNATIONAL

UBS and Credit Suisse held merger talks earlier this year

A report from Swiss media claims that a merger between Credit Suisse and UBS had the backing of the banks’ chairmen during discussions earlier this year, but talks have since dropped off after a drop in Credit Suisse’s share price placed the banks’ respective valuations beyond the merger of equals threshold.

JPMorgan in talks to settle spoofing claims for $1bn

JPMorgan Chase is in talks with US authorities over allegations it used spoofing to manipulate metals and Treasuries markets. The bank could settle for $1bn to avoid prosecution.

Yandex to buy Tinkoff for $5.5bn

Russian technology giant Yandex is set to the buy challenger bank Tinkoff in a $5.5bn (£4.2bn) deal. In an announcement yesterday to the London Stock Exchange, Tinkoff said that the two sides had "come to an agreement in principle" on the proposed takeover.

Citigroup halts market making in retail options

Citigroup reportedly closed its market making business in retail options at the start of last month, leaving Morgan Stanley as the sole big Wall Street bank in the business.

ECB calls on Brussels to make recovery fund permanent

The European Central Bank has urged the EU to consider making its new pandemic recovery fund a more permanent part of its policymaking arsenal when it restarts talks on its budget rules.

AUTOMOTIVE

McLaren CEO interviewed on supercars and EVs

COVID-19 has had a significant impact on suppliers and customers of McLaren Automotive, the firm’s chief executive Mike Flewitt has said. He told the Standard in an interview that the company is considering plans to float on the stock market in 2022 if the business can bounce back.

Geely develops new electric car technology to sell to rivals

Chinese carmaker Geely has developed an electric car manufacturing system that it plans to sell to competitors such as Mercedes-Benz owner Daimler, with driving ranges of up to 700km planned.

FINANCIAL SERVICES

Investment sector beats challenges to set new record

Britain’s investment industry has shrugged off the market turmoil caused by the coronavirus pandemic and its assets have risen to a record high. The Investment Association’s (IA) annual survey found that the total assets managed by its members for UK and overseas clients reached a high of £8.5trn by the end of last year, up 10% from £7.7trn in 2018. Investors have been shunning UK shares since the Brexit referendum in 2016, and the association found that this trend continued last year. The IA found that there had been £12.7bn of outflows from UK equities funds since the vote on the UK’s membership of the European Union was announced in January 2016.

Watchdog urged to force insurer to pay firms hit by Covid

The Financial Conduct Authority is being urged to use its enforcement powers against Hiscox to force the company to start making payouts to small businesses hit by the pandemic. Lawyers acting for almost 400 firms want the insurer to start making interim payments after a High Court judgment last week found in favour of arguments that the FCA had presented for policyholders.

Bonus pledge seemingly broken by Hargreaves Lansdown CEO

Chris Hill, chief executive of fund shop Hargreaves Lansdown has received £2.1m in bonuses even after a pledge not to take incentives until people affected by the former Woodford Equity Income fund scandal were granted access to their cash. One investor quoted in the Telegraph stated: "It just goes to show that there is plenty of money sloshing around to pay compensation to investors who have lost millions.”

HEALTHCARE

J&J launches first phase 3 trial of single-dose COVID-19 vaccine

A single-dose Johnson & Johnson COVID-19 vaccine is being tested in a phase 3 trial across three continents, with chief scientific officer Paul Stoffels noting it could be introduced rapidly.

LEISURE & HOSPITALITY

Former Blair adviser hired by gambling firm

Former adviser to Tony Blair, Lord Mendelsohn, has been hired as the new chairman of betting firm 888 Holdings. Mendelsohn released a statement saying: “I am very excited to join the board of such a world-class gaming operator. 888 is a company that I have long admired during my more than 20 years working with companies in the gaming and gambling industries.”

MEDIA & ENTERTAINMENT

Huawei chairman speaks out on US sanctions

Guo Ping, Huawei’s current rotating chairman, has stated: “Huawei is in a difficult situation these days. Non-stop aggression has put us under significant pressure. We're still assessing the specific impacts. Right now, survival is the goal." He went on: “The US has been continuously attacking us and they have modified their laws for the third time, and that has posed great challenges to our production and operation.” This follows reassurances from the company’s chairman that “sufficient stock” of components will allow it to continue operating in defiance of US sanctions.

SPORT

Former sports minister issues warning on football clubs’ fate

The fate of football clubs across the UK will be decided in the next few days, former sports minister Tracey Crouch has warned, telling the Standard: “There are clubs I’m very aware of that are on the edge and I worry that if you can’t have fans in, that you will have clubs doing a Macclesfield. I just don’t know what the numbers are going to be, but the next few days are going to be critical.” This comes after the Government reversed earlier guidance on the numbers of people allowed to attend sporting events.

ECONOMY

UK business activity growth slows as new Covid-19 restrictions take effect

Growth in business activity in the UK slowed in September, according to a closely watched survey that indicated a summer economic surge was at risk from new restrictions to curb coronavirus. The IHS Markit/Cips UK flash composite purchasing managers’ index, down from a 72-month high of 59.1 in August but still above the 50-mark separating expansion from contraction. The flash reading, based on 85% of the usual monthly responses, was taken before the prime minister announced further restrictions to control coronavirus on Tuesday. IHS Markit economist Chris Williamson warned: "Unemployment is likely to soon start rising sharply...(which) raises fears that growth could fade further as we head into the winter months, especially as lockdown measures are tightened further".

Sunak scraps Budget to focus on jobs and business support

The Chancellor has postponed his November Budget until next year amid the financial turmoil created by the pandemic, but today will announce how a replacement for the furlough scheme will form part of a new economic rescue package. Rishi Sunak is expected to announce a wage subsidy scheme for people only able to work part-time, along with an extension to four different lending schemes. These should help keep credit flowing to businesses hit by the fallout from the virus, while companies could be given more time to pay VAT and other tax bills. The FT reports that the CBI, the TUC and Acas have issued a joint call to businesses to “exhaust all possible alternatives” before making redundancies, but if they became inevitable, to treat workers fairly.

OTHER

New personal relationships guidance for Blackrock workers

Some 16,000 employees at global investment firm Blackrock have been told they must disclose the nature of their personal relationships with anyone who has dealings with the company. Any relationship that could present a conflict of interest, even if with a person working for a separate company, must be disclosed under the new guidelines. A senior Blackrock executive noted: “It takes the assessment of what is or is not a conflict out of the employees’ hands and puts it into the hands of HR and lawyers — which makes it eminently enforceable.”

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