BANKING
Santander sees profits surge
Profits at the UK arm of Santander jumped 266% last year. Profit from continuing operations climbed from £508m to £1.8bn year-on-year, while profit after tax climbed 221% from £438m to £1.4bn. The bank’s strong performance was led by customer loan growth of £7.5bn, with net interest income climbing by a fifth to almost £4bn. The bank’s reports shows that operating costs rose by 5% to £278m because of costs associated with shutting 111 branches and reducing head office space by 40%. Reflecting on the figures, chief executive Nathan Bostock said: “Thanks to the hard work of our staff across the UK, we have delivered another strong financial performance in a changeable and competitive environment.” He added: “We have further cemented our position as the UK's third largest mortgage lender, helping customers with £7.5bn of net mortgage lending, and attracted 19,000 new current account customers through our switcher campaign.” Globally, Santander reported full-year net profit of €8.1bn. Meanwhile, Santander said most of the £130m accidentally handed to customers on Christmas Day has been clawed back. The bank said money paid out when a technical problem caused duplicate payments had "largely been recovered, with non-material amounts outstanding".
Open banking watchdog set to appoint chief executive
Henk Van Hulle is reportedly set to join the Open Banking Implementation Entity (Obie) as its first chief executive. A former senior director at the Post Office, Mr Van Hulle will join the open banking competition unit as part of moves to reform its governance structure and culture following a scandal which came to light last year. An independent report which pointed to a “toxic workplace culture” at Obie said “bullying was commonplace”. Former chairman Imran Gulamhuseinwala resigned following the publication of the report by independent corporate governance expert Alison White. Obie, which was established by the Competition and Markets Authority to increase competition in the banking sector, is also set to announce the appointment of a new HR and people director as part of the overhaul.
Monzo staff granted three-months paid leave
Monzo will offer employees three-month paid sabbaticals and has told staff they can take breaks for every four years they work at the digital-only bank. Monzo said its 2,100 staff would be able to take the leave in either a three-month block or a month at a time. This is in addition to the company’s current policy of allowing its workers to take a one-month unpaid sabbatical a year. Tara Ryan, Monzo’s head of human resources, said the bank was seeking to “vastly improve the experience for employees working within it”.
INTERNATIONAL
Jefferies’ CEO tells bankers ‘we’re overpaid’
Rich Handler, chief executive of Jefferies, says Wall Street bankers are paid too much. He told Bloomberg: “Every one of us is overpaid. When you go home and look at yourself in the mirror, every one of us should count our lucky stars.” Looking at pay-outs at big US banks, the Times notes that Jamie Dimon, chairman and chief executive of JPMorgan, saw his total compensation climb by 10% to $34.5m in 2021. David Solomon, chairman and chief executive of Goldman Sachs, was paid $35m and James Gorman, who leads Morgan Stanley, received the same amount.
FINANCIAL SERVICES
MPs call for tighter online fraud rules
The Treasury Select Committee says large social media and online firms should pay compensation to those who fall victim to fraud when using their sites. The MPs argue that this would “rapidly transform” the approach of online companies when it comes to managing fraud on their platforms. They also called on the Government to “urgently legislate” to ensure mandatory reimbursement for victims of authorised push payment fraud. Mel Stride, chairman of the committee, said: “For too long, pernicious scammers have acted with impunity, ripping off innocent consumers with fraudulent online adverts, impersonation scams and dodgy crypto investments.” He added that while minsters have “made some progress in this area”, the cross-party committee is “calling on them to push harder and act faster on the growing fraud epidemic." The Treasury Select Committee also said financial services advertising regulations should apply to online companies and that the Financial Conduct Authority (FCA) must be granted the necessary powers to effectively enforce the regulations. The MPs also want social media firms to restrict promotions of financial services to FCA-authorised firms. The committee’s report on economic crime also calls for the Draft Online Safety Bill to be amended to include fraud.
Takeovers hit record highs in 2021
Buyout firms spent a record amount acquiring mid-sized British companies last year, with both the number and value of deals climbing. Analysis shows that there were 803 transactions in 2021, with this marking a 40% increase on 2020’s total. The deals completed last year were worth £46.8bn. This was up 36% on the year before. Activity also surpassed pre-pandemic levels, with volumes up 20% and deal values up 15% on 2019’s totals. The British private equity market also expanded last year, with 1,545 deals completed in 2021 compared with 1,117 in 2020 and 1,246 in 2019. Last year’s private equity deals were worth a combined £159.2bn. More than 120 companies were listed in the UK last year, raising £16.8bn.
FSCS contacts 700 more LCF investors
The Financial Services Compensation Service has contacted an additional 700 London Capital & Finance (LCF) investors inviting them to make claims. The lifeboat scheme has already contacted close to 8,500 investors, paying out £105m in compensation on 11,500 bonds. LCF collapsed owing more than £230m in 2019, putting the funds of some 14,000 bondholders at risk. The collapse drew criticism of the Financial Conduct Authority, with a report into the matter saying the regulator could have done more to protect investors and flagging "significant gaps and weaknesses" in its policies and practices.
FCA research backs overhaul of ‘capital at risk’ warnings
The Financial Conduct Authority may redesign its warning system as part of plans to strengthen rules on promoting high-risk investments, with research suggesting consumers view current warnings as “white noise”.
MEDIA & ENTERTAINMENT
Vodafone eyes deals amid activist pressure
Vodafone chief executive Nick Read says the telecoms firm is in talks with “multiple parties in multiple markets” to pursue deals, saying he believes in-market consolidation would drive greater investor value. It is noted that the firm is under pressure from activist investor Cevian Capital, which has built an undisclosed stake in Vodafone.
Future braced for pay plan rebellion
Magazine publisher Future is facing an investor rebellion over executive pay, with shareholders set to revolt over a £95m bonus package which offers chief executive Zillah Byng-Thorne up to £40m. A third of Future shareholders voted against the scheme at last year’s annual meeting.
REAL ESTATE
Mortgage costs rise ahead of Bank meeting
Households have been forced to pay hundreds of pounds more on their mortgages as lenders scramble to get ahead of an expected interest rate rise. Banks have pulled their cheapest deals from the market and increased rates for borrowers on fixed deals, with the best rate on a two-year fixed loan now 1.3%, compared to 1.1% at the beginning of January. Rising prices have compounded the escalating cost of living crisis as borrowers brace for their monthly mortgage payments to rise further
RETAIL
Shoppers see sharpest price rises since 2012
Analysis shows that British consumers have been hit by the highest price rises since 2012 after shop price inflation almost doubled last month. The shop price index from the British Retail Consortium and NielsenIQ shows annual shop price inflation jumped from 0.8% in December to 1.5% in January. The report measured inflation across UK retailers, assessing price changes for 500 commonly bought items. Food inflation rose from 2.4% to 2.7%, while non-food inflation rose to 0.9% from 0.2% in December. Mike Watkins, head of retail and business insight at NielsenIQ, said: “The surge in energy and travel costs is now impacting disposable incomes and is likely to dent consumers’ willingness to spend.” He cited NielsenIQ research showing that almost half of all households say the rising cost of living is their key concern at the moment.
Banks sell off £1.2bn of Morrisons debt
Banks involved in Clayton, Dubilier & Rice’s private equity takeover of Morrisons have sold the riskiest class of debt. Goldman Sachs, BNP Paribas and Bank of America sold £1.2bn in junior secured notes to credit funds.
ECONOMY
Bank expected to increase interest rates
With inflation continuing to climb, the Bank of England is expected to raise interest rates from 0.25% to 0.5% today. This would mark the first time officials have opted for consecutive increases since June 2004, with the Monetary Policy Committee (MPC) lifting rates from 0.1% to 0.25% in December. With inflation hitting 5.4% in December and forecast to rise to 6% as energy prices climb, financial markets are pricing in four interest rate rises in 2022. This would see rates reach 1.25% by the end of the year.
OTHER
Barclays warns over business owners’ mental health
Barclays has warned that the mental health of business owners has taken a hit since taking on debt. Hannah Bernard, the bank’s head of business banking, said that while almost 80% of businesses are optimistic about the future of their business, over a quarter feel worried or anxious after taking on debt for the first time. With the bank conducting research into the impact of the pandemic on small business owners, it also found that 58% of firms are owed money from late payments, with unpaid invoices constraining cash flow.