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Daily News Roundup: Thursday, 26th August 2021

Posted: 26th August 2021

BANKING

Atom Bank records operating profit for the first time

After five years of losses, Atom Bank has recorded its first month of operating profit. Mark Mullen, chief executive of the Durham-based digital bank, said that it had made strong progress and he was confident of delivering “sustainable profitability in the weeks and months ahead”. Mullen said: “In recent years we have invested significantly in the business and now we’re seeing the results.”

Bank North secures licence in new wave of regional lenders

New regional lender Bank North will start lending to small businesses in and around Greater Manchester from October after receiving a limited licence from the Bank of England on Wednesday.

Letter: Banks should fight fraud with artificial intelligence

Banking Circle’s Livia Benisty says financial institutions should be using AI to clamp down on fraud asserting that, when embraced on a global scale, such “innovative approaches can change the AML landscape forever.”

INTERNATIONAL

Citigroup mulls bitcoin futures trading

Citigroup has revealed that it is awaiting regulatory approval to begin trading bitcoin futures on the Chicago Mercantile Exchange. “Our clients are increasingly interested in this space, and we are monitoring these developments,” Citigroup said in a statement. “Given the many questions around regulatory frameworks, supervisory expectations, and other factors, we are being very thoughtful about our approach. We are presently considering products such as futures for some of our institutional clients, as these operate under strong regulatory frameworks,” the spokesperson added.

Citigroup tells junior bankers to take two weeks off

As part of efforts to improve working conditions for its youngest employees, Citigroup has asked its junior bankers across Europe, the Middle East and Africa (EMEA) to take two weeks off work by the end of September. The bank is fighting to retain junior bankers amid a pay war with Barclays, Morgan Stanley, Goldman Sachs and JPMorgan that has seen average salaries jump above £100,000 for new recruits.

Deutsche Bank's DWS probed

Deutsche Bank's asset-management arm DWS Group is being investigated by the US Securities and Exchange Commission and the Department of Justice after the firm's former head of sustainability said it overstated how much it used sustainable investing criteria to manage its assets.

Unvaccinated Credit Suisse staff told to delay return to office

An internal memo seen by Bloomberg reveals that Credit Suisse has told its unvaccinated US employees to continue to work from home until mid-October. Vaccinated staff, however, can return to the office from September.

AUTOMOTIVE

Car production slumped to lowest level since 1956 in July

UK car production fell sharply last month, marking the worst July performance for the industry since 1956. The Society of Motor Manufacturers and Traders (SMMT) said the global microchip shortage, staff being affected by the so-called pingdemic, and shutdowns meant just 53,438 cars were built in the month. That was a drop of 37.6% compared to July last year. Overall car production in the year to date is almost a fifth higher than during 2020 at 552,361 vehicles, but that is still 28.7% down on 2019 pre-pandemic levels. SMMT boss Mike Hawes said the July figures "lay bare the extremely tough conditions UK car manufacturers continue to face". More than a quarter of all cars made in July were either battery electric or hybrid electric, the SMMT said, the highest share on record.

AVIATION

Delta to penalise staff who shun Covid jab

Delta Air Lines will add a $200 per month surcharge on unvaccinated employees enrolled in its healthcare plan making it the first big US company to impose a financial penalty on those choosing not to take a Covid jab. However, Delta has stopped short of introducing a vaccine mandate, a step taken by United Airlines and Amtrak. Delta's chief executive, Ed Bastian, said all of those workers admitted to hospital with COVID in recent weeks were not fully vaccinated. A spokesman for the company added that each COVID hospital stay for its staff costs the carrier $40,000 (£29,000).

Gatwick plans second runway

Gatwick has revealed a £500m plan to create an extra runway by widening its main taxiway, a move that will almost double the airport’s capacity. A consultation was opened on Wednesday and the new runway could be in operation by 2029 if it wins Government approval.

FINANCIAL SERVICES

FCA: UK insurers unready for stricter rules on pricing

As part of efforts to tackle the so-called loyalty penalty, from this October, insurers in the UK will be required to offer better value for money policies to existing customers. However, the Financial Conduct Authority says too many firms were failing to meet existing regulatory standards let alone the tougher rules coming in. Sheldon Mills, executive director for supervision, policy and competition at the watchdog, said insurers that were failing to follow existing regulations were putting consumers at risk of financial harm, since customers could be sold inappropriate or poor-value products. “These firms have significant work to do urgently to be able to comply with the enhanced product governance rules. Firms that fail to do that work risk regulatory action,” he added.

Klarna continues push into America

Klarna reported a 311% rise in merchandise volume financed by its lending in the United States in the first six months of 2021, with the number of American users increasing to 20m. However, total operating losses at the “buy now, pay later” group rose from SwKr690m (£58m) last year to SwKr1.76bn as it spent heavily pushing into new regions and expanded into other banking offerings, such as current accounts and savings products. Sebastian Siemiatkowski, Klarna’s co-founder and chief executive, said that the traditional credit card was dying as consumers switched to his form of credit, which is free for most shoppers and in effect is financed by retailers.

Activist investor lifts Aviva stake above 5%

Cevian Capital has lifted its stake in Aviva above 5%, giving the Anglo-Swedish activist the right to call a shareholder meeting and have resolutions included at the insurer’s annual meetings. Cevian has been pushing for Aviva to return more cash to shareholders and take a more aggressive approach to cost cuts. Niko Pakalén, a Cevian partner, said on Wednesday: “We have increased our ownership in Aviva as the company continues to make swift progress on operational transformation, divestments and excess capital return. We remain confident that Aviva will meet or exceed the expectations we have previously communicated.”

FCA: Binance “not capable of being effectively supervised”

The Financial Conduct Authority has said the failure of cryptocurrency firm Binance to supply the regulator with information about its parent company, corporate structure or the legal body behind the Binance website indicated that it is “not capable of being effectively supervised.” The regulator said on Wednesday that Binance’s “complex and high-risk financial products” posed “a significant risk to consumers”.

LEISURE & HOSPITALITY

Rank Group's shares rise after VAT win against HMRC

Shares in Rank Group jumped 4% on Wednesday on news the Mecca Bingo and Grosvenor Casino owner is likely to secure an £80m tax rebate from HMRC. In June a judge ruled that gambling companies such as Rank Group shouldn't have had to pay VAT on certain slot machine takings between 2005 and 2013. HMRC has reportedly chosen not to appeal the decision.

MANUFACTURING

Premier Foods tells staff they can work wherever they want

Premier Foods has become the latest large business to embrace hybrid working, telling its 800 office-based staff they can work wherever they want. The maker of Mr Kipling and Bisto gravy said its St Albans headquarters will remain but "work is a verb, not a place" and the office is not "somewhere colleagues have to be for the sake of showing their face". HR director David Wilkinson said: "This isn't about getting rid of the office, it's about shifting our mindset on what it means to be flexible."

MEDIA & ENTERTAINMENT

Jungle Creations sells £30m stake

UK private equity firm Livingbridge has taken a 51% stake in the London-based social media publisher Jungle Creations. Jungle said the £30m cash injection would fuel its growth strategy through increased content output, new brands and international expansion.

REAL ESTATE

Housing market faces acute shortage of homes

A new report from Zoopla says Britain is in the midst of its “greatest stock shortage since 2015” as the number of properties for sale in June dropped by 26.4% compared with the 2020 average. With buyer demand firm at 20.5% above the 2020 average and “supply shortages expected to run until 2022”, house price growth is forecast to remain strong, the property portal said.

Blackstone lends Related $258m to refurbish Manhattan apartment block

Private equity group Blackstone has lent US real estate developer Related Companies $258m to refurbish a Manhattan apartment building, signalling confidence in New York’s luxury housing market.

RETAIL

New Frasers Group boss could be in line for £100m payout

The incoming boss of Frasers Group will be given shares worth £100m if he can increase the group’s share price from the current £6.50 to £15 by 2025. Michael Murray, the 31-year-old fiancé of owner Mike Ashley’s daughter, is set to take over as CEO next spring. He is currently the retailer’s “head of elevation” and has been charged with overseeing the revamp of Sports Direct stores as well as expanding Flannels, improving the group’s use of technology, and building relationships with high-end brands. “In considering a remuneration package, the remuneration committee was mindful of setting targets that were both stretching and achievable and that would reward an incoming chief executive commensurately with the shareholder value that could be attained,” Frasers said in a statement.

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