BoE governor warns EU over derivatives clearing power grab
Attempts by Brussels to force banks to move all clearing of euro-denominated derivatives from London to the eurozone risks a “serious escalation” in tensions in its relations with the UK, Andrew Bailey warned yesterday. Brussels has granted EU banks temporary access to UK-based clearing houses but expects them to move their euro-denominated trades into the bloc by mid-2022 when equivalence lapses. The governor of the Bank of England told MPs the EU have their eye on forcing other overseas banks to shift their euro-denominated trades to the eurozone too in a resurgence of the EU’s location policy. “The issue of location policy is not a new one,” he said. “It would be very controversial in my view because legislating extraterritorially is controversial anyway, and obviously of dubious legality frankly.” Mr Bailey went on to say that an agreement with the EU on financial services was preferable, but “there’s a point beyond which the deal is not worth having”.
Lloyds Bank issues update
Lloyds Bank has reported profits for 2020 of £1.2bn, a 70% drop on the year before, in an update in which it also announced that it will reduce office space by 20% over three years. Some 77% of employees at Lloyds have expressed a wish to continue to work from home. Lloyds said that it had increased lending to homeowners by £7.2bn over the year and that its incoming chief executive, Charlie Nunn, would start in August. The lender also took a £4.2bn charge for bad debts and announced a dividend of 0.57 pence a share. Plans to expand its insurance and wealth businesses were also revealed.
Metro Bank reports pre-tax loss
Metro Bank has reported an underlying pre-tax loss of £271.8m for the year to 31 December compared to a £11.7m loss in the year earlier period. The lender’s statutory loss before tax widened from £130m in 2019 to £310m in 2020, while its loan book decreased from £14.bn to £12bn during the period. CEO David Frumkin commented: “The pandemic has clearly impacted performance, leading to significant expected credit losses, but our transformation strategy is firmly on track and we have accelerated initiatives to shift our asset mix, bringing higher yield and improving net interest margin, as evidenced in the second half.”
Chancellor urged to stop banks from funding fossil fuels
Campaigners are calling on the Chancellor to use next week's Budget to stop banks from funding the use of fossil fuels. The plea comes as a petition signed by nearly 65,000 members of the public urges the Bank of England to "cut off the money pipeline" for fossil fuel projects.
Monument raises funds
Challenger bank Monument has raised £28m as it finalises plans to launch later this year. The company intends to target Britain's wealthy savers and will offer clients access to loans of up to £2m.
ESMA to probe zero-commission stock trading
The European Securities and Markets Authority (ESMA) will launch a probe into zero-commission trading, the regulator’s chair Steven Maijoor said yesterday. His comments come after retail investors in GameStop attempted to punish the company’s short-sellers by driving the stock high. This cost at least one hedge fund billions and raised concerns that retail investors could coordinate to send stocks artificially high. Maijoor said ESMA would continue to monitor developments and may take further action where appropriate. Meanwhile, trading in GameStop was again halted on Wednesday minutes before Wall Street markets closed. The US retailer’s shares suddenly doubled amid reports that activist investors had been responsible for the recently-announced departure of GameStop’s chief financial officer. Shares jumped another 31% in after-hours trading.
European payment network planned for 2025
The European Payments Initiative (EPI), a project backed by 22 banks including Deutsche Bank, UniCredit and ING, has said a pan-European payment network can be in place by 2025. Martina Weimert, CEO of the EPI, told an online event: “We can bring choice to consumers but also to merchants in the future. This will give us and the whole European economy more sovereignty, more independence, becoming masters of our own destiny.”
German accounting watchdog chief to step down in wake of Wirecard
Edgar Ernst, the president of Germany’s accounting watchdog, the Financial Reporting Enforcement Panel, is to step down after the regulator’s shortcomings were exposed by the Wirecard fraud. Separately, Jana Hecker, a senior investment banker who acted as a financial adviser to former Wirecard boss Markus Braun has left her job at UniCredit following revelations about the business relationship.
US central bank payment system down for 'hours'
The system the US central bank uses to process more than $3tn each day crashed on Wednesday. The Federal Reserve said the disruption was caused by an "operational error". It started restoring services within hours.
Volvo Cars and Geely scrap merger plans
The tie-up plans between Volvo and Geely have been scrapped with the companies deciding instead to pool electric vehicle technology and software development in efforts to drive savings.
Hyundai to repair over 80,000 recalled vehicles
Hyundai has announced plans to replace battery systems in 82,000 electric vehicles after they were identified as posing a fire risk.
Heathrow in going concern warning as sector woes worsen
Heathrow airport has reported a pre-tax loss of £2.01bn for its full-year compared to a £546m profit in the year earlier period. Revenues were down 62% to £1.18bn, leading the hub to issue a warning stating that the “existence of a material uncertainty... could cast significant doubt upon the group and the company's ability to continue as a going concern.”
EasyJet raises €1.2bn bond after UK reveals plans to lift lockdown
EasyJet raised €1.2bn worth of seven-year bonds on Wednesday at a yield of 1.875%, illustrating hopes for the travel sector after Boris Johnson said non-essential air travel may be able to resume from May 17th.
Former London Stock Exchange chief says London could be Spac hotspot
Former London Stock Exchange chief and co-founder of Vote Leave Xavier Rolet, along with Clive Black at Shore Capital have argued that a post-Brexit review of the UK listings market represents a “golden opportunity” for London to become a global leader in the use of increasingly popular special purpose acquisition companies (Spacs). Meanwhile, the FT is more circumspect in its view of the investment trend, noting that “The sheer number of Spacs has already sparked concerns they now in themselves constitute an asset bubble.”
City lobby group calls for tech boost
TheCityUK has urged the Chancellor to speed up the UK’s rollout of full fibre broadband in next week’s Budget to ensure that the City’s tech infrastructure does not fall behind other major finance centres. TheCityUK said the “existing speed and availability of key infrastructure in the UK, such as broadband, lags most other leading financial centres”, which in the long-run will negatively affect “growth, attractiveness, and the ability to innovate”.
Former Aviva boss joins forces with Abacai
Mark Wilson, the former CEO of Aviva, is staging a return to the British insurance sector by spearheading a new venture to target a share of the £16bn motor insurance market. Wilson has teamed up with Sun Capital Partners to launch Abacai Holdings, an insurance technology - insurtech - company.
Shares in Hong Kong bourse operator plunge as city increases trading tax
Shares in Hong Kong Exchanges and Clearing fell by as much as 12.3% after the city’s government said stamp duty charged on equity trades would be increased.
LEISURE & HOSPITALITY
Hotel group Accor swings to €2bn full-year loss
Hotel chain Accor has reported a €2bn net loss for 2020, compared with a €464m net profit in the year earlier period. The firm’s revenues fell 60% to €1.6bn.
TGI Fridays competition falls 30% amid sector shutdown
Electra Private Equity, owner of casual dining chain TGI Fridays UK, has said competition has reduced by as much as 30% owing to large-scale closures across the sector.
MEDIA & ENTERTAINMENT
Facebook's 'monopoly’ challenged by CMA leader
Andrea Coscelli, chief of the Competition and Markets Authority, has reiterated his desire to address what he has described as Facebook’s market dominance, noting that the company needed "monopoly-like power to feel confident" to block all news content on its site in Australia after authorities there said it would be required to pay for such news. He said the situation represented a “signal that it is even more urgent that we need to deal with this economic power, because this is indicative of a degree of political power that comes with economic power.”
EE upgrade plan for 4G network
Mobile operator EE has announced that it plans to upgrade its 4G coverage in over 500 areas across Britain as part of the Government’s so-called levelling up agenda. BT chief executive Philip Jansen commented: “The investment BT has made in rural areas to date means we already have the infrastructure in place needed to extend our 4G coverage footprint further, minimising the number of new sites we need to build.”
Vodafone towers spin-out to start trading soon in Frankfurt
Vantage Towers, the infrastructure firm being spun out of Vodafone, is to begin trading in Frankfurt imminently. The move comes after Vodafone announced in January that its stake in UK mobile masts firm Cornerstone would be amalgamated into Vantage.
Reckitt Benckiser cleans up amid hygiene boom
Reckitt Benckiser has reported the highest full-year sales growth in its history, with the COVID-19 hygiene boom leading to surging sales for its Dettol and Lysol disinfectants. Sales last year rose 11.8% on a like-for-like net basis to £14bn, the strongest figure since it was formed through a merger in 1999. Hygiene sales grew by a fifth as the company introduced Dettol and Lysol to 41 new markets to capitalise on pandemic demand for branded cleaning products. Alongside the sales update, the company announced the sale of its Scholl footcare brand to Yellow Wood Partners, as well as the acquisition of the Biofreeze topical pain relief brand from Performance Health.
Lifting restrictions should see economic bounceback
The governor of the Bank of England told MPs on Wednesday that the economy was performing better than expected considering the Covid restrictions, citing the adaptability of the British people. Andrew Bailey said the Prime Minister’s reopening roadmap should result in the economy growing rapidly over the next six months, getting GDP back to its pre-Covid levels by early 2022. Ben Broadbent, Deputy Governor for Monetary Policy, added that experience from last summer suggested that when restrictions are lifted there should be a bounceback in spending. However, Ben Broadbent, a deputy governor at the Bank, said surveys indicate that 70% of households intend to hold on to the extra cash they’ve accumulated during the pandemic rather than spend it.