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Daily News Roundup: Thursday, 27th May 2021

Posted: 27th May 2021


MPs want trade finance freed up

A report by MPs and peers argues that the rules governing trade finance are out of date and need to be modernised to help boost exports. The report was supported by evidence from Santander, Barclays and Lloyds, as well as business organisations. Viscount Waverley, co-chairman of the group, said: “Real opportunity exists to bring many more SMEs into the global trading system. How financial regulations might be altered to support UK trade would present an excellent opportunity to accelerate UK trade to the benefit of all. We must de-couple the notion that the SME trade finance gap is the price we pay for establishing capital market stability and tackling financial crime. The evidence can demonstrate that trade can be increased without compromising stability or efforts to fight crime”.

Banks call for overhaul of mortgage support

UK Finance wants to cut the time that those struggling to pay their mortgages have to wait before they can apply for a Support for Mortgage Interest loan from 39 weeks to 13 weeks. Charles Roe, director of mortgages at the banking trade body, said: "The wait time and eligibility criteria for Support for Mortgage Interest is preventing much-needed help going to struggling homeowners when they need it most - before their financial circumstances get worse and mortgage arrears start building up."

HSBC withdraws from US retail banking

HSBC has announced it is withdrawing from U.S. mass market retail banking by selling some parts of its business and winding down others. "They are good businesses, but we lacked the scale to compete," Noel Quinn, HSBC group CEO, said in a statement. The sale of the US network aligns the bank’s fortunes more closely with China.

Lower capital requirements post-Brexit could free up lending

Catherine McBride, an economist and Senior Fellow to the think tank The Centre for Brexit Policy, suggests the Bank of England is looking to lower capital requirements for banks that intend to operate solely in the UK, enabling them to boost lending to business and give the economy more firepower as it comes out of lockdown.

Regulators urged to probe $10bn Archegos collapse

Anil Kashyap, a Bank of England policymaker, has urged financial regulators to launch a cross-border inquiry into how the collapse of US investment fund Archegos cost banks more than $10bn.


Carlyle snaps up pharmaceuticals firm

Two British healthcare companies have been sold in deals worth a combined £2bn. The British pharmaceutical company Vectura Group has agreed a £958m takeover by Carlyle Group and is set to become the latest in a long line of UK businesses snapped up by private equity during the pandemic. Meanwhile, the private hospitals group Spire accepted a £1bn bid from Australia’s Ramsay Health Care. That offer was a near 25% premium on Spire’s previous closing price.

Maven Capital bought by asset management firm

Specialist wealth and asset management firm Mattioli Woods is to take over Scottish private equity investor and asset manager Maven Capital Partners for as much as £100m. Ian Mattioli, chief executive of Mattioli Woods, commented: “These acquisitions mark significant milestones in Mattioli Woods' journey... The acquisitions of Maven and Ludlow Wealth Management represent meaningful progress towards our ambitious medium-term goals."


US bank profits up, bosses accused of failing the public

The U.S. Federal Deposit Insurance Corporation (FDIC) said in its quarterly banking profile report on Wednesday that U.S. bank profits rose 29.1% during the first quarter of 2021 from the previous quarter as banks adjusted expectations for future credit losses downward. FDIC Chairman Jelena McWilliams said the new data shows that, despite continued challenges, "the banking industry remains resilient. Strong capital and liquidity levels support lending needs and help protect against potential losses." Separately, during an appearance before US lawmakers, the bosses of JP Morgan, Bank of America, Citigroup, Wells Fargo and Goldman Sachs were criticised for not doing enough to help ordinary people during the pandemic. "Wall Street profits no matter what happens to workers, because those profits now come at the expense of workers," one senator said.

First Intl Bank reports increase in Q1 profit

First International Bank of Israel (FIBI) has reported a 68% increase in quarterly profit, with first-quarter net profit of 287m shekels ($88.5m), up from 171m in the year earlier period. Chief Executive Smadar Barber-Tsadi commented: "The volume of loan repayment deferrals showed a sharp downward trend, indicating the quality of our credit portfolio and that of our borrowers, as well as pointing to the recovery of the local economy."

Bank of Montreal beats profit expectations

Bank of Montreal, Canada's fourth-biggest lender, reported an overall net profit of C$1.30bn, up from C$689m, a year ago. The lender set aside C$60m for future loan losses, much lower than the C$1.12bn it had set aside in the same quarter last year.

Chinese regulator issues guidance on commodities-linked products

Chinese lenders have been instructed to stop selling investment products linked to commodities futures to retail buyers, with the China Banking and Insurance Regulatory Commission seeking "clean-up progress" reports on such activity on a monthly basis.


Nissan in advanced talks to build battery gigafactory in UK

The UK Government could provide financial support to a new project at Nissan’s Sunderland site that would see the Japanese carmaker’s Chinese battery supplier Envision AESC run a battery gigafactory there. The factory could produce up to 200,000 batteries a year and make Britain Nissan’s largest electric car production hub outside Japan.

Ford announces major push to electric

Shares in Ford rose 7% yesterday after the carmaker announced plans for 40% of its sales to be of electric cars by 2030. The company unveiled a new strategy that will see it put $30bn into electrification over the next decade.


Norwegian Air emerges from pandemic a smaller airline

Norwegian Air has completed a six month restructuring process, reducing its fleet from 156 planes to just 51 aircraft, cancelling £7bn worth of orders from Boeing and Airbus and discontinuing its transatlantic operation to operate solely as a short-haul airline.


UK construction hit by delays in post-Brexit certification scheme

Delays in replacing the Europe-wide CE trade markings used to certify construction products are threatening to raise material prices and cause supply backlogs that could delay building projects.


St. James’s Place enjoys strong inflows

St. James's Place says gross inflows for the five months to May will be around 23% higher than the same period last year. It comes off the back of improving client confidence paired with a higher level of savings, continuing the momentum seen in the first quarter.

‘It’s wild out there’: crypto firms lure top bankers in price boom

Cryptocurrency firms are increasingly hiring top finance executives, with John Dalby, chief financial officer of hedge fund Bridgewater joining crypto financial services company NYDIG.


De La Rue halves net debt

Banknote printer De La Rue has announced that it has halved its net debt in the last 12 months, with CEO Clive Vacher remarking: "We have made encouraging progress in our polymer growth plans, securing a new site to double capacity during FY 2021/22." Adjusted revenue was down 10.2% from £432m to £388.1m in the year to 27 March 2021.


Amazon buys MGM for $8.5bn

Amazon has announced the acquisition of MGM for $8.45bn (£6bn) giving the US tech giant a huge library of films and TV shows, including the James Bond franchise.

GB News to launch mid-June

Britain’s new TV channel GB News has announced plans to go live on Sunday June 13th. The channel is backed by the American broadcaster Discovery.


Professional services M&A on a roll

Anthony Shatz in City AM muses on the rise in M&A and corporate transactions involving professional services firms in recent years and says as professional services offerings become more sophisticated and technology driven, there will be an ever greater requirement for more capital to be injected into the sector. He predicts that this should drive further corporate activity, in the form of private equity and family office investment, M&A and IPOs.


British Land changes strategy after £1.1bn loss

British Land is targeting life sciences companies as potential tenants as it seeks to shift its portfolio towards growth sectors after taking a £1.1bn annual hit. The property firm is exploring the potential for healthcare and life sciences facilities at Canada Water and Regent's Place. Simon Carter, chief executive, said: "We're thinking more and more of our campuses as innovation centres." He wants to further align the business to areas where it can benefit from the "pick-up in economic activity that is now emerging."

Some 74% of London firms set for office return by September

A new survey by Addison Lee has revealed that nearly three-quarters (74%) of London businesses are planning a return to the office by September, with half (51%) planning to do so by 30 June.


M&S expects recovery as customers return to stores

Marks & Spencer said it expects profit this year to recover to around £300m-350m but cautioned that a return to dividend payments was unlikely. The retailer said that trading in the first six weeks of its new financial year had been “ahead of the comparable period two years ago”, with home and clothing sales both growing. For the 53 weeks to April 3rd, pre-tax profit before “adjusting items” was £50.3m, down from £403m in the equivalent 52-week period ending in March 2020. Nevertheless, the retailer recorded a statutory loss of £209m, due to exceptional charges that totalled almost £260m.

SoftBank leads $775m investment in Perch

SoftBank's Vision Fund 2 has led a $775m investment in consumer goods company Perch. The firm buys and operates third-party brands that sell their products on Inc.


Businesses face staff shortages and wage hikes

The economist Paul Ormerod warns in City AM that wage inflation is upon us with staff shortages across the board amid a jobs boom as employers come out of lockdown. Although we are not facing the double-figure price rises witnessed in the 1970s and 1980s, a tipping point has been reached, Ormerod continues, adding: “Staff shortages, wage rises, inflation – these are all back on the agenda.”

London accounts for nearly 25% of UK GDP

The capital accounted for 22.7% of total UK GDP in 2019, according to new figures from the Office of National Statistics, and 23.8% of total Gross Value Added. London business leaders said the figures demonstrated the need for “concerted action” to ensure the capital continues to power the country's economy in the aftermath of the pandemic.

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