BANKING
Mortgage lending falls back in April
Mortgage borrowing fell back in April from the record high seen in March, Bank of England (BoE) data show. Net mortgage borrowing totalled £3.3bn in April, down from £11.5bn in March. April’s total was also lower than the £5.7bn monthly average for the six months to February. The decline in April follows a rush to snap up homes the month before, with buyers looking to complete transactions before the end of the stamp duty holiday, with the tax break originally expected to conclude in March but now extended to June. The BoE report also shows that the number of mortgage approvals increased in April, hitting 86,900 compared to 83,400 in March. Considering the impact of the stamp duty holiday and possible market activity in the coming months, Nitesh Patel, strategic economist at Yorkshire Building Society, said: "The rush to beat the June deadline continues to fuel demand and we expect June to be another big month, but after that we expect the market to cool as the tax relief is reduced from £500,000 to £250,000."
Households repay £377m in consumer credit
Bank of England figures show that households collectively made a £377m net repayment in consumer credit in April, with this including credit cards, personal loans and overdrafts. Analysis shows that while people have been making significant net consumer credit repayments since the first lockdown in March 2020, April’s net repayment was lower than the average £1.7bn that has been paid back each month over the past year. The amount of cash in bank accounts rose by £10.7bn in April. The fact this is far lower than the figures recorded in recent months suggests people are starting to spend more as the economy reopens, with a 9.2% rise in retail sales over the month also suggesting this may be the case.
Bank branch closures causing problems for less tech-savvy consumers
The Express reports on ongoing bank branch closures, quoting Caroline Abrahams, charity director at Age UK as saying that: “The scale of the bank branch cull over recent years means communities across the country are being cut off from their money". She says a rapid move towards online banking over the past few years "has caused significant problems for many older customers, particularly those with visual and dexterity problems." UK Finance is cited, with the trade association saying: “Technology is not for everyone and bank branches continue to play an important role in the life of local communities, meaning decisions to close them are never taken lightly. The industry has been particularly careful to support vulnerable customers with a series of initiatives including specialist support lines, cash delivery and third-party access cards for carers.”
INTERNATIONAL
Canadian banks beat second-quarter estimates
Canadian banks remain cautious amid a tentative economic recovery, with analysts noting that the top six lenders, Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada beat estimates for second-quarter profit, citing lower-than-expected provisions for credit losses and strong capital market performances.
Postbank fees announcement
New customers at Deutsche Bank retail unit Postbank are to be charged fees to compensate for negative interest rates, as the lender seeks ways to generate revenues to counter European Central Bank demands to keep bank deposits.
Deutsche tells US bankers they must be back in office by September 6
Deutsche Bank has outlined its post-pandemic return-to-work policy, telling US investment bank employees that they must be back in the office by early September.
AVIATION
Wizz Air warns of full-year losses as pandemic bites
Wizz Air has announced that it expects to fly 30% of its normal schedule this summer, but predicted a net loss for the year to the end of next March.
FINANCIAL SERVICES
FCA endorses platform switching initiative
The Financial Conduct Authority (FCA) has reaffirmed a commitment to reducing platform switching times and has praised the Star initiative, a partnership between Criterion and TeX and aims to promote good practice among providers when moving clients' money and assets from one firm to another. Sheldon Mills, the FCA’s executive director for consumers and competition, said the introduction of core management information to measure transfer performance was “an important interim step towards achieving its objectives, which aim to bring down transfer times”. He added: “We have committed to a review of progress against our desired outcomes in relation to transfers in 2022, and we will actively be following Star’s progress towards its objectives over the next 12 months.”
Divido raises $30m in funding
Buy-now-pay-later firm Divido has raised $30m in a Series B funding round boosted by HSBC and ING. The retail finance company, which already operates in 10 markets, is looking to expand into other markets internationally on the back of the latest bout of funding.
Britain needs better protections for investors
The FT says the Financial Conduct Authority needs to “ask searching questions of itself”, questioning its response to corporate scandals and warning that financial regulators “tend to be reactive rather than proactive”.
HEALTHCARE
European Investment Bank increases COVAX support
Werner Hoyer, head of the European Investment Bank, has said the EU's financial arm is prepared to increase its support for the COVAX vaccine-sharing programme to €900m in loans. The bank had previously pledged €600m in loans to the scheme, which is co-led by the World Health Organization and vaccine alliance Gavi.
MEDIA & ENTERTAINMENT
Broadband boost for ‘underserved’ East of England
New broadband firm Upp is planning to connect 1m homes and businesses in the East of England to gigabit internet by 2025. The company will invest £1bn in the new fibre-to-the-home network, which will be built in "underserved" regions. It estimated that 600 new jobs will be created by the project.
PROFESSIONAL SERVICES
Furlough scheme could hinder economic growth
Reed says it saw the best month for vacancies since February 2008 in May but has warned that the furlough scheme is hindering the hiring process. The jobs listing site added 275,000 roles in May, a 26% month-on-month climb and 237% year-on-year increase. Chairman James Reed said that while the job retention scheme “was a vital weapon in our fight against the pandemic last year … as time has worn on, it could hinder the economy’s recovery and growth," saying the initiative is making it "harder to recruit" workers. Pointing to the impact of the pandemic and Brexit, Mr Reed stressed the importance of luring back workers to plug skills gaps, saying: “A relaxation of work visa rules for EU migrants or another policy which encourages these workers back will be essential in the coming months”. “Otherwise, the UK’s economy may not be able to grow as quickly as many hope,” he warned.
REAL ESTATE
Government opts against stamp duty reform
The Government will not cut or reform stamp duty, despite a holiday on the levy rolled out amid the coronavirus crisis helping to boost the housing market over the past year. Ministers say the tax, which raised £8.4bn in 2019/20, is an important source of revenue at a time when the public purse needs topping up after taking a hit during the pandemic. MPs on the Treasury Committee had recommended that stamp duty be reformed after its inquiry into tax head it described as not being fit for purpose. However, ministers said the levy is “an important source of Government revenue … is simple to collect and administer, and helps pay for the essential services the Government provides.” The Government response to the inquiry also warned that a permanent cut or removal of stamp duty “would be likely to have a significant cost to the Exchequer.”
Half of UK firms to move office amid shift to remote working
Almost half of mid-to-large size firms in the UK plan to move offices within the next three years after the work-from-home “watershed moment”, a new survey by law firm Gowling WLG suggests. Of nearly 500 senior executives at firms with at least 20,000 sq ft of leased space, 89% said they will be in a position to move out in the next 36 months due to lease expiries or break clauses. In total, 46% are “actively looking” to move, searching out better locations, upgraded facilities or more space. A third said they would be downsizing as staff will more frequently work remotely.
RETAIL
Small business boost as shoppers pick independents
A poll suggests small businesses may be set for a post-pandemic boost, with a third of shoppers saying they are now more likely to support independent retailers. A poll of 2,000 people saw 34% say they have used small businesses more frequently amid the crisis and intend to continue doing so, with half of this group saying they would rather spend their money with a small business than a large national firm. Just over half (52%) said they had made a conscious effort to shop more with small businesses than larger chains in the last year. The Vistaprint analysis suggests younger consumers are more likely to support smaller firms, with 49% of 18-24 year-olds and 43% of 25-34 year-olds declaring an intention to do so compared to 24% of those 65 and over.
Reopening hospitality in England fails to boost retail footfall in May
New data shows footfall to retail destinations was down 27% on levels seen in 2019 in May. While visits to retail parks fell 5.7%, high streets recorded a 36% decline.
Etsy buys fashion app Depop for $1.6bn in ‘Gen Z’ push
Etsy has announced the acquisition of second-hand fashion app Depop, giving Etsy access to a younger demographic than its primary consumer base.
OTHER
Ministers will take gentle approach to office returns
City A.M. reports that ministers will not take a hard-line approach to getting people back into the office once restrictions are fully eased, with a source telling the paper there needs to be “a co-operative, gentle reminder” that “is about extolling the virtues of people going back into work”. This contrasts to a stance taken last year where it was suggested firms could sack those who refused to stop working remotely post-lockdown. City A.M. says some business groups are calling for officials to help enable firms to implement a more flexible model. The British Chambers of Commerce wants businesses to be given “clear guidance, information and best practice resources” to help them “embrace the broadest range of remote, workplace and flexible working options as we emerge from the pandemic”. It is noted that firms including Deutsche Bank and HSBC say they will utilise hybrid working schemes.