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Daily News Roundup: Thursday, 5th May 2022

Posted: 5th May 2022


1 in 4 Barclays customers could switch over climate plan

A poll commissioned by campaign group 38 degrees shows that 26% of Barclays customers say they would consider switching banks if the lender does not take more ambitious climate action. Barclays’ proposed climate strategy includes an ambition to be net zero by 2050 and reduce its greenhouse gas emissions by 90% against 2018 levels by the end of 2025. It also plans to source 100% renewable electricity for its global operations by the same time. Meanwhile, a group of protesters yesterday targeted Barclays’ AGM, demanding the bank stops financing fossil fuels. Extinction Rebellion and sister movement Money Rebellion said they had disrupted the AGM. Barclays saw 19.19% of voting shareholders go against the bank’s climate strategy. Meanwhile, 11% opposed the bank’s pay policy. Concerns had been raised over the pay packet for chief executive CS Venkatakrishnan, which includes fixed pay of £2.7m and a long-term incentive plan worth up to 140% of his salary.

Standard Chartered shareholders question executive pay

Standard Chartered has seen 31% of shareholders vote against its pay policy and 27% oppose the 2021 pay report due to executive bonuses that came despite a record regulatory fine. Concerns have been raised over a plan that could see CEO Bill Winters, who earned £4.7m last year, take home £8.2m if the lender hits all its targets for 2022. It is noted that the bank’s annual meeting in London was disrupted by climate activists. Extinction Rebellion disrupted the AGM to demand the lender stops financing fossil fuels.


Nest to invest pensions in private equity with Schroders

Eleven million low earners are to begin investing some of their savings in private equity after their state-backed pension scheme - National Employment Savings Trust (Nest) - hired Schroders. Nest said it planned to allocate about 5% of its members’ savings to private equity and hoped to have £1.5bn invested in the category by early 2025.


US opts for biggest rate rise in 22 years

The US Federal Reserve has announced its biggest interest rate increase in more than two decades as it looks to tackle soaring prices that have taken inflation to a 40-year high. The central bank has lifted its benchmark interest rate by half a percentage point, to a range of 0.75% to 1%. Federal Reserve chairman Jerome Powell said: “Inflation is much too high and we understand the hardship it is causing … We are moving expeditiously to bring it back down."

Allianz strikes deal to form Africa’s biggest insurer

Allianz has struck a deal with South African insurance company Sanlam to create the biggest insurer in Africa. The two firms launch a new joint venture that will operate in 29 different African countries, and is expected to have combined total group equity value in excess of 33bn South African rand (£1.7bn).


Direct Line hit by rising inflation and ban on 'price-walking'

Direct Line has suffered a hit from rising inflation and newly introduced rules stopping car and home insurers from charging existing customers more than new consumers. The insurer reported a 2.4% fall in premiums to £734.3m in Q1. Premiums at its home insurance division fell the most, by almost 10% to £126.4m, while motor premiums dipped 5.4%. Direct Line said part of the decline was down to it being unable to hike prices for loyal customers after the ban on so-called 'price walking' was introduced in January by the Financial Conduct Authority.

Plus500 hit by pay rebellion

Fintech firm Plus500 has seen shareholders vote down its remuneration report, with 55% against the pay plan. This came after shareholder advisory group ISS said bonuses were set to be handed to Plus500 bosses without appropriate performance targets in place. An ISS report said: “Concerns have been identified regarding whether performance targets under the annual bonus, which paid out at maximum for the year under review, were suitably stretching.”


UK cuts Russia off from professional services

Russia has been banned from using British management accounting, consulting and PR services in new sanctions announced by the UK. Foreign Secretary Liz Truss said the ban will cut off service exports "critical to the Russian economy," adding that it will “put more pressure on the Kremlin and ultimately help ensure Putin fails in Ukraine." Business Secretary Kwasi Kwarteng added: "Our professional services exports are extraordinarily valuable to many countries, which is exactly why we're locking Russia out.” He added: “By restricting Russia's access to our world-class management consultants, accountants and PR firms, we're ratcheting up economic pressure on the Kremlin to change course." The Government said UK accountancy, management consultancy and PR services account for 10% of Russian imports in these sectors.


Mortgage borrowing hits £7bn

Bank of England data shows that mortgage lending rose to £7bn in March, up from £4.6bn in February and ahead of the pre-pandemic average of £4.3bn recorded in the 12 months to February 2020. The Bank reported 70,961 mortgage approvals in March, with this down slightly on February’s total, while approvals for remortgaging rose slightly to 48,800. Adrian Lowery, financial analyst at investing platform Bestinvest, commented: “As house prices stabilise and lenders tighten their mortgage availability criteria in the coming months, the trend is likely to return closer to levels seen before the pandemic disrupted the property market in a quite unpredictable manner.”

More homeowners look to lock in 10-year deals

Analysis by data firm Twenty7Tec shows that thousands of people looked to lock into a long-term mortgage deal last month, with homeowners hoping to get in ahead of further interest rate rises. Almost 7,000 people searched for a mortgage with a fixed rate of more than 10 years in April, a 72% increase on the same month last year. There was a 26% increase in the number of borrowers searching for a 10-year fixed mortgage and a 25% spike in those seeking a five-year fix. The respective number of borrowers searching for two and three-year fixed-rate mortgages fell by 35% and 57% year-on-year in April. On average, people are fixing mortgages for a year longer than they were a year ago.


Supermarket sales slow in April

Supermarket sales slowed in April, as households respond to the growing cost of living and spending habits begin to return to normal after pandemic restrictions. Over four weeks to April 23, shoppers added slightly fewer items to their baskets compared to March, while total grocery sales at UK supermarkets over the period were down by 1.8% compared to 2021 levels. However, this compares to the 4.1% year-on-year decline seen in March. Over the past week, shoppers have spent £10.1bn on groceries, down from £10.5bn in the same period in 2021, but higher than the pre-pandemic figure of £9.6bn in 2019. 

Boohoo posts 94% fall in profits

Online fast-fashion firm Boohoo saw a 94% decline in pre-tax profits to £7.8m in the year to the end of February, compared with £124.7m the previous year. Although sales rose by 13.6% to £1.98bn, there was a 40% year-on-year decline in growth amid international shipping disruption and wavering demand during the pandemic. Boohoo spent £22m more on shopping and flying in goods from factories, and an additional £38m on delivering items to customers.

Ocado shareholders revolt over bonus plan for bosses

Ocado has been hit by a shareholder rebellion over plans which could hand its top bosses up to £20m a year. Just over 29% of shareholder votes were cast against its executive pay proposals. Ahead of the vote, advisory groups Glass Lewis and ISS – as well as several major shareholders - had been critical of firm’s value creation plan, which uses Ocado’s share price to determine whether significant bonuses should be handed out.


Bank set to hike interest rates to 1%

The Bank of England is set to raise interest rates to the highest level since 2009 in a bid to ease inflation, with the Monetary Policy Committee (MPC) expected to increase rates by 0.25%, taking the base rate to 1%. The MPC has raised rates at each of its past three meetings as it looked to rein in inflation, which hit a 30-year high of 7% in March. Bank of England governor Andrew Bailey recently warned the Bank is “walking a very tight line” between tackling inflation and avoiding a recession. The economy grew just 0.1% in February, down from 0.8% in January. The Bank last month said it expects Q1 growth to be at around 0.75%, having previously forecast GDP to remain flat. However, experts expect GDP to fall in Q2 as consumer confidence dips as price pressures increase. Meanwhile, former MPC member David Blanchflower has warned that the economy is already in recession and urged the Bank to slash interest rates. Speaking to BBC Radio 4's Today programme, Prof Blanchflower insisted it would be an “error” for rates to be raised further.

Consumer credit growth up in March

Individuals borrowed £1.3bn in consumer credit in March, according to Bank of England figures. The annual growth rate for consumer credit borrowing rose to 5.2%, from 4.5% in February. This marks the highest annual rate since February 2020. The data shows credit card borrowing increased by 10.6% in March, hitting £800m. The Bank reports that households also deposited £6bn into banks, building societies and NS&I accounts. While small and medium-sized non-financial businesses repaid £700m – the 13th month in a row of net repayments - large businesses borrowed £1.9bn from banks, down from £4.3bn in February.


Inflation drives dealmaking decline

Global mergers and acquisitions fell in the first four months of the year, with soaring inflation and Russia’s invasion of Ukraine having an impact on dealmaking. Analysis by deal intelligence firm Refinitiv shows that around $1.4trn worth of M&A deals were announced globally during the first four months of 2022. This marks a 21% dip on the opening four months of 2021, a period that saw a post-pandemic surge in activity which took deal value to an all-time high. Refinitiv said dealmakers began to show signs of recovery in April, with deals totalling $378.4bn announced last month. This was 23% up on March’s total but still 25% down on the total recorded in April 2021.

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