Mortgage approvals sink to lowest level in two years
Mortgage approvals fell to their lowest level in two years as interest rate rises put off buyers, new Bank of England figures suggest. They slumped to just over 46,000 in November, down from just under 58,000 in October. The fall in mortgage approvals was “another indicator of slowing demand for UK housing as the rising interest rate environment bites”, said Daniel Mahoney, economist at Handelsbanken. BoE data also showed consumer credit rose by £1.5bn in November, more than double the £700m borrowed in October. Credit card borrowing jumped to £1.2bn in November from £400m in October.
HSBC could be blacklisted for ditching fossil fuel investment
HSBC has been included in a list of banks and investors warned by Kentucky lawmakers over their stance on energy investment. Kentucky State Treasurer Allison Ball announced on Monday that, after a review of their energy and climate policies, the banks and asset managers were found to be in an active boycott of fossil fuel companies. The Kentucky state government could begin divesting from the firms if they didn't reverse their boycotts, Ball said. HSBC was listed primarily due to its public statements, Ball told the Times, citing its “trajectory” over the coming years. “It seems like they changed direction, even fairly recently.”
CIBC to appeal order to pay $848m in damages
The Toronto-based Canadian Imperial Bank of Commerce has said it will appeal an order to pay about $848m in damages to private equity firm Cerberus Capital Management, related to a contract dispute tied to the 2008 global financial crisis.
New car sales fall to a 30-year low
The UK recorded its worst year for car sales in 30 years in 2022, according to figures from the Society of Motor Manufacturers and Traders. Total sales were around 700,000 cars fewer than were sold in pre-Covid 2019, when registrations exceeded 2.3m units. Mike Hawes, chief executive at the SMMT, said car makers have really struggled to be able to make the vehicles in sufficient quantities, “primarily due to semiconductor shortages.” Mr Hawes continued: “The automotive market remains adrift of its pre-pandemic performance but could well buck wider economic trends by delivering significant growth in 2023.”
Coinbase reaches $100m settlement with New York regulators
US-based cryptocurrency exchange Coinbase will pay a $50m penalty to New York’s Department of Financial Services for compliance failures and spend a further $50m to boost compliance efforts aimed at blocking potential criminals from using the exchange. The regulator said Coinbase’s lax onboarding requirements for customers meant the platform was exposed to potential criminal activity. Paul Grewal, Coinbase’s chief legal officer, said in a statement that the company has “taken substantial measures to address these historical shortcomings and remains committed to being a leader and role model in the crypto space, including partnering with regulators when it comes to compliance.”
Fidelity bans retail clients from Jupiter UK fund
Fidelity International has taken the unusual step of banning its retail clients from making new investments in Jupiter UK Mid Cap, a £1.1bn unit trust that specialises in backing mid-size companies. Fidelity said it was restricting execution-only customers from buying new units in the fund, which was once a highly popular investment but has fallen out of favour after poor performance in the past year. The City is increasingly nervous about open-ended funds investing in unlisted assets in the wake of the Woodford implosion of 2019.
PPE Medpro accused of supplying defective gowns to NHS
Court documents seen by the Guardian reveal that the Department of Health and Social Care (DHSC) has accused PPE Medpro, a company linked to the Conservative peer Michelle Mone, of supplying defective gowns that could have compromised the safety of patients had they been used in the NHS. The Government paid PPE Medpro £122m for 25m sterile surgical gowns under a contract awarded in June 2020 after Mone first approached ministers offering to supply PPE. PPE Medpro is the subject of an ongoing potential fraud investigation by the National Crime Agency.
British firms exit Taiwan ahead of Chinese invasion
Western companies are growing increasingly concerned that China is on the brink of invading Taiwan, with UK company Brompton Bicycle one of many manufacturers drawing up plans to shift parts of its supply chain out of both countries. Brompton's managing director Will Butler-Adams said many companies are sticking with the same suppliers, but have asked them to de-risk by relocating to other areas in Asia, such as Thailand or Vietnam.
MEDIA & ENTERTAINMENT
Meta fined €390m over use of data for targeted ads
Facebook parent company Meta has been fined €390m (£346m) by the Irish Data Protection Commission (DPC) for breaking EU data rules. Advertisers are able to target users of Facebook and Instagram – another Meta company – by using the data they share on the platforms. But Meta’s claim that users consent to receive ads based on their personal data when they agree to the terms and conditions they sign was rejected by the European Data Protection Board, which is comprised of all EU privacy regulators. This forced the Irish regulator to act after it had initially backed Meta’s legal argument. Privacy campaigners say the move could force Meta to ask users to “opt in” to having their data used for targeted ads, potentially dealing a massive blow to the company’s advertising revenue. Meta said it would appeal against the decision and that it was “incorrect” that personalised ads could no longer be offered without users’ consent.
Culture secretary drops plans to privatise Channel 4
Michelle Donelan has ruled out the privatisation of Channel 4 arguing that the broadcaster should instead have greater commercial flexibility so it can raise more of its own funds by producing more of its own content. The Culture Secretary also said the Government would consider lifting the channel’s £200m borrowing limit.
BlackRock and M&G defer withdrawals from UK property funds
BlackRock has added further delays to redemptions on its £3.5bn UK property fund in an attempt to smother a rush to exit by investors. BlackRock first deferred withdrawals due for payment in September following a surge in withdrawal requests over the summer. It will now delay withdrawals that were due at the end of December 2022. Other fund managers such as M&G, Schroders and Columbia Threadneedle have restricted withdrawals from UK property funds in recent months. M&G also said on Wednesday that it was deferring redemptions on its Secured Property Income Fund. However, Legal & General Investment Management said it had removed the restrictions on withdrawals for its £3.7bn Managed Property fund. Institutional investors have been rushing to sell illiquid assets, particularly UK commercial property, whose values fell 17% over the six months to November 2022.
Morrisons suffers festive setback as rivals steam ahead
New figures show sales at Morrisons fell 2.9% to £3.1bn in the 12 weeks to December 25. Meanwhile, sales at the Bradford-based retailer’s main rivals, Tesco, Sainsbury's and Asda jumped by more than 6%. Aldi and fellow discounter Lidl saw sales rise 27% and 23.9%, respectively. Hargreaves Lansdown analyst Susannah Streeter says Morrisons has struggled to regain its footing since its takeover by CD&R, which left the supermarket chain struggling under a £6bn debt pile. “‘It seems Morrisons has had little wriggle room to slash prices in the same way as its rivals.”
Amazon expected to lay off over 17,000 employees
Amazon is laying off as many as 17,000 employees, according to reports, far more than the 10,000 expected when the cuts began last year. The latest cuts represent about 1% of the workforce, but the increased total suggests the company’s outlook has darkened.
Foreign investors dump UK gilts at record rate
Figures from the Bank of England show that overseas investors sold a total of £38.4bn of government debt between September and November, with the three-month average rate of £12.8bn the highest since BOE records began in 1982. Derek Halpenny, head of research at Japan’s MUFG bank, said it was also the first time that foreign investors offloaded gilts for three months running since 2016. The Treasury needs to raise more than £300bn next year while the BOE plans to sell £40bn of the gilts it bought under its QE programme. The apparent loss of foreign institutional confidence doe not bode well, Halpenny continues, noting that market concerns could drive up yields and push sterling down, deepening the cost-of-living crisis.
BCC finds business optimism low
A quarterly survey by the British Chambers of Commerce reveals British businesses are nearly as pessimistic as they were in the midst of the pandemic, as they brace for a drop in profit during a recession in 2023. “The widespread economic damage caused by Covid shutdowns has been compounded by subsequent inflation, global trade crises, and new trade barriers with the EU,” David Bharier, head of research at the BCC, said in a statement Wednesday. “Business conditions deteriorated significantly in the second half of 2022.”