BANKING
Cashless concern for millions of people
Ten million people would struggle to cope in a cashless society even though only 17% of payments are now made with notes and coins, a report by the Royal Society of Arts (RSA) has found. Going cashless would also make budgeting difficult and would be a "major inconvenience" to another 15m, the Cash Census report reveals. Martin McTague of the Federation of Small Businesses notes: "One in four small high street businesses say cash is still the most popular payment method among customers.” Major banks recently signed a new voluntary agreement which means an independent assessment of local needs will be carried out each time a branch is shut. These reviews could recommend a shared branch is opened, an ATM installed or a Post Office upgraded. Banks will commit to delivering whatever is recommended. The Government is legislating to give the Financial Conduct Authority oversight of access to cash. It has also paved the way for more convenience stores to offer cashback to customers, even if they are not making a purchase.
CMA says HSBC broke banking rules
The Competition and Markets Authority (CMA) says HSBC broke banking rules by telling small firms they had to take out a business current account to get a loan. The practice, known as ‘bundling’, affected 204 customers over nine years, with cases relating to loans worth more than £800,000. HSBC, which reported itself to the CMA and ended the loans from last September, has offered refunds of all the fees and charges. Adam Land, senior director at the CMA, said: “The rules are clear. Banks should not ask customers to open or retain business accounts in order to have a loan with them,” adding: “It is right that HSBC have offered refunds and we will monitor compliance with our directions closely.”
OakNorth profits climb 70%
Digital lender OakNorth boosted its profits by more than 70% last year, with the economic rebound from the pandemic driving a surge in business lending. It saw revenues climb 26% year-on-year to £176m in 2021, while pre-tax profit increased 73% to £134.5m. Lending topped £1.8bn, with total facilities growing by 20% to £4.2bn, up from £3.5bn in 2020. OakNorth posted a net release of £3.7m it had written off to protect against bad loans, compared with a charge of £21.6m in 2020 when businesses felt the strain of the pandemic and loan defaults were more common. CEO Rishi Khosla said: “We look forward to continuing to build on this momentum and supporting the change-makers, productivity-drivers, job-creators, and innovators who are helping fuel the economic recovery, even as uncertainty lingers.”
Younger users bank on sustainability
Data from Swedish open banking firm Tink suggests bank customers aged between 18 and 34 are shunning lenders with weak environmental credentials. They are opting instead for financial products that allow them to manage their environmental impact. Around 42% of younger users said they would not use a financial provider that they did not regard as environmentally conscious, and 40% said they only invest their money into companies or funds considered sustainable — twice the national average of 21%.
INTERNATIONAL
Citigroup to sell Indian retail business for $1.6bn
Citigroup has agreed to sell its Indian retail business to local lender Axis Bank for $1.6bn, with the deal including Citi’s credit cards, retail banking, wealth management and consumer loans in India.
FINANCIAL SERVICES
City watchdog extends crypto registration deadline
The Financial Conduct Authority (FCA) has extended a deadline for crypto asset firms in the UK to secure approval. While today had been the cut-off, the City regulator said firms on its temporary register of cryptoasset businesses will be given additional time if they can show they require it. Despite the extension, the UK's fintech market faces a cryptocurrency exodus as more than 60 firms were rejected or withdrew their application to the FCA. Over a hundred companies applied for temporary permission to operate in the UK while their applications were ongoing, with only 12 firms remaining on that register. The FCA has approved 33 firms for permanent registration with the watchdog, with this allowing them to continue providing crypto services from within the UK after April 1. An FCA spokesperson said the Temporary Registration Regime will close tomorrow, "for all but for a small number of firms where it is strictly necessary to continue to have temporary registration,” adding: “This is necessary where a firm may be pursuing an appeal or may have particular winding-down circumstances.” Mel Stride, chair of the Treasury Select Committee, said: “It is disappointing to hear that the FCA hasn’t fully met its own already-extended deadline, which the committee strongly encouraged it to meet.”
Businesses set to sue Mastercard and Visa
More than 100,000 British hospitality and travel businesses are set to file a class action lawsuit against Mastercard and Visa over allegations that the payments firms charge fees on corporate credit cards at up to six times the maximum level. This comes as the UK introduced a cap on inter change fees in 2015, which capped the fees at 0.3% for credit cards and 0.2% for debit cards. However, lawyers will claim that the rules did not apply to corporate credit cards, and as a result Mastercard and Visa have exploited the loophole to charge up to 1.8% per transaction on corporate credit cards.
ISS targets Swiss Re chair over board diversity
Proxy adviser ISS has recommended investors vote against the re-election of Swiss Re chair Sergio Ermotti, flagging concern over the lack of gender diversity on the reinsurer's board.
LEISURE & HOSPITALITY
Starbucks pays just £5m UK corporation tax
Starbucks paid just £5.4m in UK corporation tax last year despite making a gross profit of £95m. The UK division collected sales of £328m in the year to October 3, 2021, with this up from £243m in the previous year when shops were temporarily closed during the lockdown. Starbucks Coffee Company (UK) made a £95.1m gross profit for the year, but after swallowing administrative expenses of £78m, its pre-tax profits were reduced to £13.3m, on which it paid £5.4m tax. A year earlier the coffee chain received tax credits of £4.4m after recording a pre-tax loss of £40.9m.
Pub group returns to profit
Britain's oldest brewer has returned to profit and announced its first dividend since the beginning of the pandemic. Shepherd Neame reported a profit of £5.4m in the 26 weeks to December 25, compared to a loss of £7.2m for the same period a year earlier. Sales rose 55% to £78.7m.
REAL ESTATE
Average mortgage hits £235k
The total value of mortgages lent rocketed last month as buyers face more affordability tests. Some 70,933 mortgages were given the green light in February, compared to 73,841 in January, according to the Bank of England's monthly money and credit figures. However, the total value lent rose from £16.6bn to £16.7bn, meaning the average value of a mortgage loan is 10.4% higher than this time last year. The average mortgage was £235,474 in February, up 4.6% month-on-month. Approvals for remortgaging with a different lender rose to 48,200 in February. This was the highest total for remortgage loans since February 2020 but still below the average seen in the year leading up to the pandemic.
Law firms battle it out for London’s top offices
Top law firms took more than a quarter (27%) of all the office space leased in the City last year as they vied for high-specification workplaces in an effort to attract talent, according to new figures. Efforts to boost sustainability, in line with plans for net zero, are also driving demand among law firms for green, sustainable offices. It is noted that only 25% of offices occupied by the UK's top 200 law firms are rated as sustainable.
RETAIL
High street footfall down on pre-pandemic levels
Overall high street footfall levels remained 23% lower than pre-pandemic levels in February. A number of major shopping destinations have been hit harder than most, including London's Oxford Street, where footfall remains 46% lower than pre-pandemic levels. However, footfall in Guildford is up by 28%, while Leeds has seen a 7% rise.
Holland & Barrett debt repayment held up
A crucial debt payment to Holland & Barrett creditors has been held up after HSBC sought additional reassurance over the British retailer's links to Russian oligarchs subject to sanctions. LetterOne, the Russian-backed but London-based investment group that owns Holland & Barrett, paid the interest on a €415m loan last week. However, creditors had still not received payment by the end of a grace period yesterday.
ECONOMY
Shop price inflation hits 2.1%
Data from the British Retail Consortium (BRC) shows that annual shop price inflation has hit its highest rate since September 2011, climbing to 2.1% in March compared to 1.8% in February. The BRC-NielsenIQ Shop Price Index shows food inflation has jumped to 3.3%, while non-food inflation reached 1.5%. The data shows that consumers have seen their fifth consecutive month of rising prices. BRC chief executive Helen Dickinson said: "Our Shop Price Index has been rising more modestly than other inflation measures as retailers were able to limit price rises on many essential goods.” However, she added: “With overall inflation likely to rise even higher according to the Bank of England, consumers will not have an easy ride this year. The war in Ukraine and volatility in commodity markets is likely to further dampen consumer confidence in the coming months." Mike Watkins, head of retailer and business insight at NielsenIQ, added: "With cost-of-living increases accelerating, the next few months will be a difficult time for consumers.”
Cost pressures force families to cut back on essentials
An Office for National Statistics (ONS) poll shows that the cost-of-living crisis is forcing some households to cut back on food spending and reduce their use of gas and electricity. The survey of 13,000 people saw 83% say they have seen an increase in their cost of living this month, up from 62% in November. While 34% of those saying costs have risen said they were using less gas and electricity at home, 31% are spending less on food. It was also found that half of respondents have cut back on non-essentials. Household gas and electricity bills are expected to rise by 54% from Friday, while average band D council tax bills in England are expected to go up by £67. Inflation has hit a three-decade high of 6.2% and the Bank of England expects it to climb to 8% this spring and warns it could rise close to 10% later this year.