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Daily News Roundup: Thursday, 2nd July 2020

Posted: 2nd July 2020

BANKING

FCA: No formal probe into overdraft charges

The Financial Conduct Authority (FCA) has said that while there will be no formal investigation, it will continue to monitor unarranged overdraft charges after lenders set virtually identical overdraft rates of about 40% in response to new regulations banning excessive and complex fees. A move toward greater transparency will see banks forced to publish historical overdraft pricing as of August, with this reflecting rates charged between April and June. The FCA says the greater transparency will put “competitive pressure” on overdraft rates as consumers shop around. The FCA said yesterday: “Having reviewed the evidence we obtained, we do not intend to open a formal investigation at this stage. We will be keeping a close watch on how prices develop, particularly during and after the coronavirus pandemic.” The watchdog said it would carry out a review of the overdraft rule changes by spring 2021.

Virgin Money to see fewer job losses

Virgin Money is to proceed with plans to shut or merge 52 branches, with the loss of 300 jobs, having suspended the plans in response to the coronavirus crisis. It initially announced the shake-up in February, with the plan following its £1.7bn merger with Clydesdale Bank and Yorkshire Bank in 2018. Around 300 jobs will be lost instead of the previously mooted 500 as some head office roles have been saved by having staff working from home, while more business banking contact centre employees are also being retained to help small firms amid the crisis. Virgin Money’s Lucy Dimes said the decision to recommence the redundancies and branch closures “has not been taken lightly”.

Raab hits out at HSBC over HK law

Foreign Secretary Dominic Raab has criticised HSBC’s support for a new rule which criminalises anti-government movements in Hong Kong. Mr Raab said: “I’ve been very clear in relation with HSBC and ... all of the banks … The rights and the freedoms and our responsibilities in this country to the people of Hong Kong should not be sacrificed on the altar of bankers’ bonuses." Last month Aviva, HSBC’s 12th largest shareholder, publicly criticised HSBC and Standard Chartered's support of the law.

PRIVATE EQUITY

Private equity firms eye Aareon

German real estate lender Aareal Bank has reportedly shortlisted private equity groups interested in a stake of its software business Aareon, with EQT, Blackstone and Bain among those said to have advanced to the final round of bidding for a minority stake.

Ardian to snap up Monte dei Paschi real estate portfolio

Italy’s Monte dei Paschi dei Siena has signed a deal to sell a portfolio of real estate assets to French private equity firm Ardian by year-end.

INTERNATIONAL

ECB promises banks it will do more in urge to merge

The European Central Bank has advised bank executives that it will encourage mergers, clarifying its position on takeovers and offering guidance on issues that may once have been considered hurdles.

Technical issue stops trading at stock exchanges across continent

A “technical issue” on German electronic trading platform Xetra resulted in suspension of trading on several European stock exchanges for nearly three hours. Stock exchanges in Frankfurt, Vienna, Ljubljana, Prague, Budapest, Zagreb, Malta and Sofia were affected, according to exchange operator Deutsche Boerse.

AUTOMOTIVE

Tesla the world's most valuable car maker

Investor optimism over the potential for the electric car market has seen Tesla become the world's most valuable carmaker, overtaking Japan's Toyota. Trading on Wednesday saw its market value hit $209.47bn, overtaking Toyota by around $4bn. However, Toyota sold around 30 times more cars last year and its revenues were more than 10 times higher. While Toyota sold 10.46m vehicles in the year to March and posted revenues of $281.20bn, Tesla delivered 367,200 vehicles with sales of $24.6bn. Analysts at the Jefferies say Tesla remains "significantly ahead of peers in product range, capacity and technology".

AVIATION

Virgin Group commits £200m of immediate funding for Virgin Atlantic

Some £200m of immediate funding for struggling airline Virgin Atlantic has been earmarked by Virgin Group, with additional shareholder support of approximately £400m also committed.

FINANCIAL SERVICES

UK optimistic over EU access for the City

Despite the UK missing a deadline for handing regulatory equivalency assessments in regard to the financial services industry to the EU, Downing Street remains optimistic that it can secure post-Brexit access to EU markets for the City of London. The Prime Minister’s official spokesperson said the deadline was missed as the EU gave the UK 1,000 pages of forms later than expected, adding that the UK is still upbeat on the prospect of securing equivalency for its financial services industry. They said: “As the UK and EU start from a position of having similar financial services regulation this should be a straight forward process.”

Watchdog was told of Wirecard link to laundering

The Financial Conduct Authority (FCA) was last year warned that Wirecard may have been be linked to a scheme which disguised the processing of high-risk payments. The regulator was given evidence of a “transaction laundering” network where connections to Wirecard were identified. Fraser Perring, a short-seller, said he raised concerns with the watchdog for “four years and four months with a complete absence of public sanction or caution against the [business].” “Was the FCA asleep at the wheel?” he asks. Meanwhile, police have raided Wirecard offices on the continent as investigations into the €1.9bn accounting scandal intensify.

Britain to reopen temporary market access

The Financial Conduct Authority has said Britain will reopen its temporary market access regime for European Union financial firms in September so as to tide companies over during Britain’s exit from the bloc.

Europe market trading hours plan criticised

The Federation of European Securities Exchanges says plans for reduced trading hours by London bodies would not benefit investors or markets. The body suggested the adoption of other measures to improve workplace culture, including increasing the number of shifts, while US exchange operator Nasdaq commented that shortening hours would be “misguided.”

Lloyd's of London calls for SME support

A new report by Lloyd's of London calls for the insurance industry to do more to help SMEs recover from the impact of the coronavirus crisis, with chairman Bruce Carnegie-Brown saying: “COVID-19 has demonstrated that there is much more we can do to support our customers by providing protection for the changing risks they face.” Business interruption insurance designed to help SMEs during future crises, by pooling non-damage business interruption coverage among participants in Lloyd’s insurance market, is one suggestion set out in the report.

HEALTHCARE

Spire fined after admitting price-fixing role

The Competition and Markets Authority (CMA) has ordered Spire Healthcare to pay £1.2m in fines after the firm admitted to participating in an illegal price fixing scandal.

MANUFACTURING

Manufacturing fuels hope of a V-shaped recovery

Manufacturing activity grew in June, prompting hope that the UK may see a V-shaped economic recovery following the hit from the coronavirus pandemic. The IHS Markit/Cips manufacturing PMI, where scores below 50 show decline and above 50 show growth, rose from 40.7 in May to 50.1 in June, having hit an all-time low of 32.6 in April. James Brougham of industry lobby group Make UK said: “Manufacturers are leading the economic recovery.” Considering the data, Pantheon Macroeconomics’ Samuel Tombs warned that “it remains highly unlikely that manufacturing output will recover to its pre-coronavirus level on a sustained basis within the next year”. Meanwhile, the survey raised concern over jobs in the sector, with employment falling for a fifth straight month in June. Dave Atkinson, UK head of manufacturing at Lloyds Bank, warned that manufacturers are “bracing themselves for the second half of the year in the knowledge that a reckoning looms.”

MEDIA AND ENTERTAINMENT

CMA warns of monopoly on online ads

The Competition and Markets Authority (CMA) says the Government should seek to end Google and Facebook’s monopoly over digital advertising, saying the firms’ dominance of the advertising market leads to higher prices on a number of products. Noting that Google and Facebook earned around 80% of the £14bn spent on digital advertising in the UK in 2019, the competition watchdog said it is “concerned that they have developed such unassailable market positions that rivals can no longer compete on equal terms”.

REAL ESTATE

Annual house prices see first fall in eight years

House prices in the UK fell for the first time on an annual basis in eight years in June, according to Nationwide, slipping 0.1% year-on-year, having increased 1.8% in May. Month-on-month, prices slipped 1.4% as the coronavirus lockdown hit the property market. Figures show the typical home was worth £216,403 in June.

Schroders and Pamfleet agree acquisition deal

Schroders is to buy a majority stake in Asian real estate investment firm Pamfleet, which will be renamed Schroder Pamfleet after the deal.

RETAIL

Retailers cut roles

Thousands of retail workers are set to lose their jobs after a number of firms announced plans to lay off staff over the past two days. Job losses announced include up to 5,000 at Upper Crust owner SSP Group and 700 at Harrods. Arcadia, whose chains include Topshop and Dorothy Perkins, is shedding 500 of its 2,500 head office staff. John Lewis has also said it will close stores but has yet to detail job losses, while firms including WH Smith and Bensons for Beds have announced plans to reduce staff numbers. BBC News says the cuts come ahead of the Government’s furlough scheme being pared back before ending in October, suggesting that with firms having to consult on redundancies for 30-45 days, “some will feel that now is the time to act”.

SPORT

Wigan woe as club enters administration

Wigan Athletic has become the first club in professional English football to enter administration following the coronavirus pandemic. This comes just four weeks after Hong Kong-based consortium Next Leader Fund took over the Championship club, promising to secure its future. Administrators from Begbies Traynor say the immediate objective is to “ensure the club completes all its fixtures and to urgently find interested parties to save Wigan and the jobs of the people who work for the club”.

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