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Daily News Roundup: Thursday, 4th February 2021

Posted: 4th February 2021

BANKING

Santander profits fall in Q4

Santander says UK profits fell 44% to £552m in 2020, from £981m the year before, while underlying profits rose 4% quarter-on-quarter in Q4 to £247m. The bank set aside another £98m for expected loan losses in Q4, with the total set aside in 2020 hitting £448m. Santander will continue to review its 564-branch network as the pandemic has accelerated the shift towards online banking and could cut jobs as the result of an ongoing overhaul. Nathan Bostock, UK chief executive, said the bank is “optimistic about the second half." Meanwhile, Spanish owner Banco Santander slumped to its first annual loss in its 160-year history, with a net loss of €8.77bn driven by €12.6bn in one-off charges booked in Q2. Net profit fell 90% to €277m in the fourth quarter versus the same period a year earlier.

TSB boss takes pay cut

TSB chief executive Debbie Crosbie has seen her annual pay package drop by nearly a fifth after the lender suffered losses. Ms Crosbie’s pay fell 19% to £1.17m from £1.44m in 2019, with it noted that she waived bonuses for 2020 amid the pandemic. TSB’s annual report shows that the bonus pool for its workforce has been cut from £17.7m last year to £10.5m, with bonuses cut to 3.9% of salary from 8.6% in 2019. The bank recorded a £204m loss last year, with the pandemic hitting business. This comes after a £46m pre-tax profit in 2019.

Cashplus becomes fully fledged bank

Cashplus, one of the UK’s oldest fintech companies, has become a full bank, having secured approval from Prudential Regulation Authority. Cashplus offers current accounts for UK SMEs, currently serving 7% of all new businesses, and has more than 1.6m small business customers. It is aiming to lend up to £1bn to SMEs unable to access loans from the high street banks amid the economic recovery.

Loan liabilities a risk for SME owners

Analysis by Purbeck Insurance Services shows that owners of SMEs have more than £1.2bn of personal liabilities linked to emergency pandemic support loans, with 1,587 directors agreeing to such terms when taking on credit through the Coronavirus Business Interruption Loan Scheme. The report, which comes after a Freedom of Information request, shows that the average size of a business interruption loan backed by a personal guarantee is £766,000.

Lloyds refunds £975k

The Competition and Markets Authority says Lloyds Banking Group has refunded more payment protection insurance customers a share of £17,000, taking the total it has paid back to £975,000. This comes after it admitted to sending 8,800 people incorrect information in annual reminders to mortgage PPI customers.

INTERNATIONAL

Swiss regulator authorises return to London trading

Switzerland's financial regulator has granted approval for shares in Swiss companies to once again trade on UK exchanges, with a dispute between the EU and Switzerland seeing the bloc’s exchanges banned from Swiss shares since June 2019.

AVIATION

Fresh government support call from airports

Airports in the UK are seeking more government support amid claims from the Airport Operators’ Association (AOA) that passenger numbers would not recover to pre-pandemic levels until 2025 at the earliest. Airport operators are urging full business rates relief for the next two years, with additional support during the current lockdown. AOA chief executive Karen Dee said: “2020 was a devastating year and the start of 2021 has so far dashed airports’ hopes that this year will be significantly better.”

FINANCIAL SERVICES

LSE chief wants listing rules eased

London Stock Exchange chief executive David Schwimmer has told the Mail would like to see rules eased so tech companies can gain premium listings and a potential place in the FTSE 100 share index without having to give up a structure with a dominant founder shareholding. Mr Schwimmer also questions the EU’s post-Brexit attitude to the City, saying it is baffling that while officials in Brussels “have granted equivalence to markets in New York and in Hong Kong and in Australia they have chosen, I think for the politics of Brexit, not to grant equivalence to venues in the UK”. He goes on to suggest that Britain is presently more equivalent than other trading hubs.

Libor transition urgency highlighted

FTSE 350 firms are being urged by investment managers to accelerate efforts to move away from some £108bn worth of Libor-linked bonds, with the Investment Association stating in a letter to bond-issuing companies: “With the deadline now fast-approaching, there remains a significant number of outstanding Libor-linked bonds which have not yet transitioned to a new rate.”

New trading regulations expected

Following mass buying by amateur traders which has seen wild price fluctuations in firms shorted by major US fund managers, tougher markets regulations could affect hedge funds, small investors and stockbrokers. Oriano Lizza, premium sales trader at brokerage CMC Markets, said of small traders targeting other firms: “I think from a regulatory standpoint the concern is that they could continue to do this.” Chris Brankin, CEO at TD Ameritrade, believes regulators will look to curb any market volatility or manipulation.

Concern over pension income gap

Research by the Pensions Policy Institute (PPI) suggests women retiring in 2020 were due to receive just £11,760 a year on average in total pension income. By contrast, the figure was £16,330 on average for men - a pension income gap of 28%. Meanwhile, the gap between men and women when it comes to investing is estimated to be 67%. Research from wealth manager InvestEngine also shows that 78% of its account holders are male.

HEALTHCARE

New vaccine deal agreed by GSK and CureVac

A €150m (£132m) agreement has been reached between GlaxoSmithKline and German firm CureVac under which a new generation of COVID-19 vaccines will be developed.

MEDIA AND ENTERTAINMENT

Vodafone third quarter revenues up

Vodafone has reported a 0.4% rise in third quarter revenue. Total revenues for the firm are down by 4.7% year-on-year, while it has maintained to its full-year guidance for taxes, earnings before interest and depreciation of between $17.3bn and $17.6bn.

Sony profit outlook increases amid lockdown demand

Sony’s full-year profit outlook has been raised by a third to 94bn yen amid ongoing demand for video games, music and other home entertainment. The firm reported third quarter operating profit of 359.2bn yen - up 20% from a year ago.

Frontier Developments sees sales rise

Video game developer Frontier Developments has reported an increase in revenue of 15% to £36.9m in the six months to November 30.

Gaming companies acquired by Sweden’s Embracer

Swedish video game group Embracer is to acquire US-based Gearbox and Aspyr Media, as well as Cyprus-based Easybrain, for up to $2.5bn in cash and stock.

REAL ESTATE

Second house buyers look to Home Counties

There has been a surge in second house sales, according to analysis by Coutts, with the Home Counties beginning to rival traditionally popular areas such as Cornwall and the Cotswolds. The pandemic sparked a 43% increase in the sales of second homes last year as families sought a bolt-hole outside the city, said the bank. Oxford, Guildford and Tunbridge Wells were the most popular locations in the South East, as more workers considered moving to towns from where they could still commute into London. Cornwall and Gloucester also saw high demand.

Shortage of mortgages will drive first-timers to new-build market

First-time buyers require “eye-watering” deposits to get themselves on the housing ladders, according to Barclays, as there are only a handful of 95% loan-to-value mortgages currently on the market. The bank suggests that one way around the problem is through the Help to Buy scheme. However, the initiative is only available on new build houses. Reflecting on the issue, Gavin Jago, a real estate analyst at Barclays, said the shortage of high LTV deals “is likely to drive first-time buyers to the new-build market”.

Stamp duty holiday sees £530m in lost taxes

HMRC figures show that the stamp duty holiday rolled out to stimulate the housing market amid the coronavirus crisis has seen the Government’s tax take slip by more than half a billion pounds. The figures show that overall stamp duty receipts fell 16% to £2.76bn in Q4, compared to £3.29bn in 2019. The £530m drop in receipts comes despite a 14% increase in the number of transactions. The analysis also shows that stamp duty receipts in Q4 were up 47% compared to the third quarter.

RETAIL

Tax demand as Amazon’s sales surge

Demand for online retail driven by the coronavirus outbreak and lockdowns has seen Amazon’s UK sales rise 51% to a record $26.5bn (£19.4bn) last year, prompting calls for it to make a greater tax contribution. The firm has not detailed how much tax it paid in the UK last year but it has faced criticism after paying just £293m in tax in 2019 despite UK sales of $17.5bn.

Asda owners split off petrol stations

Asda's new owners plan to sell its petrol station network and some of its distribution centres while taking on £3.5bn worth of debt, with Mohsin and Zuber Issa and TDR Capital set to offload the petrol stations to their own EG Group for £750m.

ECONOMY

Services activity slips in January

Activity in the services sector fell in January, with pressures stemming from the latest coronavirus lockdown driving the steepest contraction since May. The IHS Markit/CIPS purchasing managers’ index (PMI) fell from 49.4 to 39.5 last month, with this stronger than the 38.8 economists had forecast but short of the 50 or higher reading which signifies growth. Tim Moore, economics director at IHS Markit, said that although service providers “experienced a steep downturn in business activity” in January, the speed of decline “remains much slower than last spring.” On the outlook for the coming months, IHS Markit said: “While the UK economy is on course to contract sharply during the first quarter of 2021, businesses remain confident that pent-up demand and an easing of pandemic restrictions will provide a springboard to recovery later this year.”

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