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Daily News Roundup: Thursday, 25th August 2022

Posted: 25th August 2022


Mastercard teams up with Binance to launch crypto payments card

Mastercard has partnered with Binance, the world’s largest crypto exchange, to launch a crypto payment card which can be used to make purchases in more than 90m stores worldwide as well as pay for household bills. The card launched in Argentina earlier this month and will expand to additional countries in future. When a user makes a payment their crypto is automatically converted into fiat currency which is paid directly to the merchant. City AM notes, however, that due to the UK’s Financial Conduct Authority’s (FCA’s) decision to blacklist Binance for anti-money laundering failures last year UK consumers are unlikely to gain access to the card in the near future.

Atom Bank defends four-day working week

Atom Bank has said its four-day week trial is going well despite problems for other businesses attempting the new working pattern. “We firmly believe the four-day week is the future of working life,” said Anne-Marie Lister, the bank's chief people officer. Ms Lister said that “despite warnings from some sceptics”, their evidence shows that there has been no negative impact on employees or customer service. Many of those businesses that signed up for a separate nationwide pilot scheme say staff already seem happier and more motivated while productivity has improved. However, others are starting to question whether they can realistically continue once the pilot ends in December. 

Ping An co-CEO defends call for HSBC split

Ping An has denied being an activist investor despite repeatedly calling for HSBC to spin off its Asia business. The Chinese insurance group’s co-CEO Jessica Tan told Reuters it had made a significant investment in the bank over seven years and was simply concerned about its returns HSBC has said a break-up would mean a potential long-term hit to the bank's credit rating, tax bill and operating costs, and bring immediate risks in executing any spin-off or merger. Tan was speaking a day after Ping An reported a 3.9% rise in first-half net profit, the first increase for the period in three years.


Blackstone in talks to buy Pink Floyd’s music catalogue

Blackstone is among the several bidders for the rights to Pink Floyd's music. The private equity giant would strike the deal through Hipgnosis Song Management, which Blackstone took an ownership stake in last year. Pink Floyd is seeking £400m or more for both the copyrights to its songs and its recordings.


Texas accuses BlackRock of energy company boycott

BlackRock, along with several Europe-based financial groups, could be banned from doing business in Texas after they were found to be shunning the oil and gas industry in favour of sustainable investing and financing goals. The move would also see state pension and school funds in Texas forced to divest their shares in the groups. A new law limits Texas governments from entering into certain contracts with firms that have curbed ties with carbon-emitting energy companies. Glenn Hegar, the Republican state comptroller, on Wednesday said in a statement: “The environmental, social and corporate governance (ESG) movement has produced an opaque and perverse system in which some financial companies no longer make decisions in the best interest of their shareholders or their clients, but instead use their financial clout to push a social and political agenda shrouded in secrecy.” Several Republican states are fighting back against corporate policies on ESG issues they say hurt legitimate industries. BNP Paribas, Credit Suisse, Danske Bank, Jupiter Fund Management, Nordea Bank, Schroders, Svenska Handelsbanken, Swedbank and UBS along with a list of 348 mutual funds were also marked for divestment.


UK car production grows for third consecutive month

Figures from the Society of Motor Manufacturers and Traders (SMMT) show UK automotive production grew in July by 8.6%, marking the third consecutive month of growth. However, car production remains 46.4% below pre pandemic levels as a result of supply chain shortages and weak exports.


Visa and Mastercard blame fraud for post-Brexit fee increases

In response to a probe by UK lawmakers into rising credit card fees, Visa and Mastercard blamed higher levels of fraud in cross-border transactions and increased competition for the spike in costs. The UK’s Payment Systems Regulator (PSR) launched a probe into cross-border interchange fees in July and began a separate market review into other charges, including those levied on businesses that use the networks of Visa and Mastercard for processing payments. Commenting on the responses, Mel Stride MP, Chair of the Treasury Committee, said: “All businesses, particularly small and medium-sized firms, are facing rising costs on many fronts, and the increase in cross-border card fees will only add to these pressures. It is vital that these businesses have every opportunity to succeed and are not burdened with disproportionate additional costs at this time.”

US fund manager under fire over sponsorship of climate sceptics

Federated Hermes is under pressure from clients to explain its support for a Republican group that has threatened to remove state pension assets from financial companies that do not support fossil fuel industries. Invesco, Fidelity Investments and banks including JP Morgan and Wells Fargo are among other institutions that sponsor the State Financial Officers Foundation (SFOF), which has lobbied aggressively against policies aimed at slowing global warming and opposed proposals by US regulators to introduce new climate risk disclosure standards for institutional investors. Federated Hermes is a reputable proponent of ESG investing, but responding to the criticism of its sponsorship of SFOF, CEO Christopher Donahue said last week: “Diversity of thought and respect for the views of others, no matter how they differ from our own, is critical to long-term consensus building and the betterment of our world.”

FCA to bolster ESG expertise

The Financial Conduct Authority (FCA) is setting up a new ESG Advisory Committee as part of efforts to meet the government objective for the watchdog's policies to help Britain create a net zero economy by 2050. The committee will include a small number of external experts and provide advice on supervising how firms apply ESG rules, and on developing the watchdog's ESG strategy. Paul Crighton, partner at UK law firm TLT, said: "The creation of an ESG Advisory Committee to the FCA could be a welcome opportunity to make sure any new rules are ambitious enough and practical, so that they do ultimately work in practice and make a difference.”


Meat and drinks sectors at risk of CO2 shortages

Food and drink groups are to hold urgent talks with the Government after the owner of Britain’s last carbon dioxide-producing fertiliser plant said it would be temporarily shut down. CF Industries, the US fertiliser group, which is the UK’s biggest carbon dioxide producer, said it would close its Billingham plant in north-east England due to the rising cost of natural gas. CO2 is manufactured as a by-product of ammonia production. Billingham is the only factory in Britain that produces the carbon dioxide required for surgical operations, meat processing and drinks production. Minette Batters, president of the National Farmers Union, said the temporary shutdown was "extremely worrying".


SEC questions Twitter on how it counts fake accounts

The Securities and Exchange Commission asked Twitter in June about its methodology for calculating fake accounts and “the underlying judgments and assumptions used by management.” The regulator said it had completed its review in July. News of the questioning comes after Twitter’s former security chief blew the whistle on how the social media platform had put national security at risk and misrepresented the number of bot accounts, among other failings. In October, Twitter will challenge Elon Musk’s decision to back out of buying the company over its alleged failure to disclose the proportion of fake accounts on its platform.


Interest rate rises to drive down London house prices

The cost of living crisis and surging interest rates is likely to hit London house prices to the tune of 12% over the next two years, experts say. Homes in the capital are much more unaffordable in relation to earnings that the rest of the country, so buyers there are the most exposed to rising interest rates. The South East will see property prices fall by 9% over the period while the South West and the East of England will each suffer house price falls of 6.5%. Andrew Wishart at Capital Economics explains: “Areas where house prices are highest relative to incomes are most vulnerable. London and the South East are therefore likely to see the largest falls and the North and Wales the smallest.” Separately, rents in London are expected to level out by the end of this year as the capital’s chronic shortage of homes starts to ease, according to a report in the Telegraph.

Investors price in $130bn loss on China developers’ dollar bonds

Without a major intervention from Beijing, investors are pricing in almost $130bn of losses on the more than $200bn in outstanding dollar bond repayments owed by Chinese real estate groups.


Business confidence in negative territory

According to a survey of accountants by trade body the ICAEW, business confidence in the UK has hit minus-5, the first negative reading since Britain emerged from lockdowns last year and a sharp decline from a high of 47 in the third quarter of 2021. The high costs of production, driven by rising prices of raw materials and energy , as well as staff shortages and transport chaos were likely to have affected optimism, the ICAEW said. Michael Izza, ICAEW chief executive, said: "With inflation running at levels not seen for 40 years, ministers must provide targeted support for struggling businesses and households to keep the lights on this winter." Suren Thiru, economics director for the institute, added: “Record high price pressures suggest the inflationary surge will intensify considerably in the coming months. A perfect storm of growing input costs for businesses, eye-watering energy bills and persistent supply constraints means that inflation could peak higher and later than the Bank of England predicts…A painful downturn looks inescapable.”


FCA sets out hybrid working policy

The Financial Conduct Authority is to keep its hybrid working policy, the regulator’s board has agreed, but staff will be required to spend at least 40% of their monthly hours in the office. Senior figures will need to be in the office 50% of the time. The regulator said: “During our hybrid working pilot, we found that offering colleagues greater flexibility was the best way to work effectively, productively and inclusively.”

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