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Daily News Roundup: Thursday, 6th April 2023

Posted: 6th April 2023

BANKING

Another rate hike could spell bad news for homeowners

Despite the Bank of England hiking rates from 0.1% to 4.25% since December 2021, homeowners have been exposed to only small increases in costs so far, writes the Standard’s Jonathan Prynn. The latest figures show that in February the average interest rate on all loans from banks secured on a home was just 2.64% - only 64 basis points up from the 2% low nearly a year and a half ago. But as increasing numbers of low-priced fixed deals reach the end of their lives the costs are bound to rise, and with markets pricing in another hike to 4.5% in May and even 4.75% by the summer, homeowners whose mortgage expires in the second half of the year could be in for a shock.

Santander customers offered ‘exclusive account’ paying 4%

Santander is offering customers access to an exclusive savings account called Edge which pays 4% on balances up to £4,000, which includes a 0.50% AER bonus rate for the first 12 months from opening. To benefit from the exclusive account, savers need to hold a Santander Edge current account.

PRIVATE EQUITY

Venture capital funding in start-ups halves as tech downturn bites

Venture funds invested $76bn into start-ups in the first quarter of 2023, less than half the $162bn they deployed in the same period a year ago, as the economic downturn weighs on valuations.

INTERNATIONAL

Swiss government cuts bonuses for 1,000 senior Credit Suisse bankers

The Swiss government has asked the country’s finance ministry to cut SFr60m ($66.1m) worth of bonuses for Credit Suisse bankers following the bank’s takeover by UBS. Meanwhile, the Swiss financial regulator has defended the rescue of Credit Suisse as the best solution with least risk of spreading a wider crisis and severely damaging Switzerland's standing as a financial centre. “One can well imagine, what devastating effect the insolvency of a big wealth management bank of Credit Suisse AG would have had on Swiss private banking,” said Urban Angehrn, chief executive of the Swiss Financial Market Supervisory Authority. “Many other Swiss banks could have faced a bank run, just as Credit Suisse did itself in the fourth quarter.” Finally, Colm Kelleher, UBS chairman, attempted to reassure investors at the bank's AGM on Wednesday insisting management would be "laser focused" on integrating its troubled rival, though he admitted it would pose a challenge.

Jersey’s finance sector hits a record high

Jersey's finance sector achieved record investments in 2022, according to the Jersey Financial Services Commission. It said the value of regulated funds under administration reached a new high of £488.8bn, up £38.6bn (8.6%) compared with 31 December 2021. The rise was driven by a strong hedge fund sector, which grew by 24% over the year. Meanwhile, the total value of deposits in Jersey banks rose by £14.8bn (11%) over 2022 to stand at £148.3bn, the highest level since 2013.

Western Alliance Bancorp's deposits fall 11%

Western Alliance Bancorporation has revealed that its first-quarter deposits were 11% lower than at the end of 2022. The bank held total deposits of $47.6bn as of March 31, down from $53.6bn as of end-2022, with outflows attributed to customers spooked by the US banking crisis.

Hedge funds make $7bn from betting against banks during turmoil

Hedge funds made over $7bn in profits by shorting bank stocks during last month’s liquidity crisis, with many betting on an upcoming solvency crisis too.

AUTOMOTIVE

Electric cars boom, but chargers fail to keep up

A 19% surge in battery car sales in March has added to fears that a lack of public chargers could put the adoption of the green vehicles under strain. Some 46,000 zero-emission cars sold last month out of a total 287,000 new car sales. Total sales are still about half the number what they were in March 2017. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, which collates the sales data, said: “The best month ever for zero emission vehicles is reflective of increased consumer choice and improved availability, but if EV market ambitions – and regulation – are to be met, infrastructure investment must catch up.”

FINANCIAL SERVICES

FCA reveals business plan for year ahead

The Financial Conduct Authority published its business plan on Wednesday, setting out its top priorities for the year ahead. These include introducing a new consumer duty and reforming the UK’s listing regime. The FCA forecast that its annual funding requirement for 2023-4 will increase by 8.5% to £684.2m. Implementing the “future regulatory framework”, which includes replacing retained EU law, will add nearly £13m to its budget for the year, the watchdog said.

Activist issues warning to De La Rue

The activist investor Crystal Amber has written to fellow shareholders in banknote printer De La Rue accusing the company of failings in turnaround, stewardship and governance. Crystal Amber, which last week called for the removal of chairman Kevin Loosemore, accused De La Rue’s turnaround plan of failing “by every measure” and reckons revenue for the year will come in 25% below the forecasts. Since March 2021, the company’s share price has fallen by 75%.

MEDIA & ENTERTAINMENT

Ofcom concerns over cloud domination of Amazon and Microsoft

Ofcom plans to ask the Competition and Markets Authority to investigate the market for cloud services, which host software, storage and computing power on remote servers for companies. The communications regulator launched an investigation into the dominance of Microsoft, Amazon Web Services (AWS) and Google last September. Ofcom believes the market is “critical for many businesses across the economy, including telecoms companies, broadcasters and public sector organisations."

PROFESSIONAL SERVICES

Kirkland & Ellis defies dealmaking slump as revenues reach $6.5bn

Kirkland & Ellis saw revenues increase nearly 8% to $6.5bn last year, exceeding the performance of many rivals, most of whom suffered sharp declines in profit and revenues.

RETAIL

Retailers suffer sharp drop in footfall

Retailers in the UK experienced a sharp drop in footfall in March as consumers restricted themselves to essential shopping due to rising cost-of-living pressures. New data shows footfall across all retail destinations fell by 2.8% from February, a significant drop considering the 9.4% increase seen between January and February. The footfall on high streets was down 18.7% on 2019 levels, and 0.6% below last March. Analysts attributed the drop to inflationary pressures and interest rates. As a result, consumers are only making essential trips, leading to an annual decline in footfall of 1.4% across UK high streets at the weekend, the first month this has occurred.

ECONOMY

New orders deliver boost to services sector

The UK’s services sector enjoyed a surge in new orders and rising business confidence last month, according to a survey by S&P Global and CIPS. The services purchasing managers’ index (PMI) fell back from 53.5 to 52.9 in March but remained above the 50 mark that signals growth. John Glen, chief economist at the Chartered Institute of Procurement and Supply, said the survey “could trigger hopes that a turnaround is finally on the horizon for the UK economy” after growth stalled at the end of last year. Consumer confidence improved, adding to levels of orders on the domestic front, while the highest rise in exports since September 2014 added another cheerful note.”

WTO warns surge in borrowing costs set to hit exports

Rising interest rates and financial instability will weigh on export volumes this year, the World Trade Organization has warned, with growth expected to come in at just 1.7%, far below the decade average of 2.6%.

OTHER

‘Friendshoring’ is a risk to growth and financial stability, warns IMF

The International Monetary Fund (IMF) has warned that the trend away from globalism to investing with geopolitical allies risked depressing growth and raised the risk of financial instability. A report from the IMF also warned that should geopolitical tensions continue to intensify and countries further diverge along geopolitical fault lines, foreign direct investment (FDI) may become even more concentrated within groups of aligned countries, with emerging market and developing economies more vulnerable to FDI relocation than advanced economies.

Cash App founder Bob Lee stabbed to death in San Francisco

The founder of mobile payments service Cash App was fatally stabbed in San Francisco on Tuesday morning. Bob Lee, 43, launched Cash App when he was chief technology officer at Jack Dorsey’s payment processing company Square, now known as Block. Dorsey described the news as “heartbreaking” and added that Lee had been “instrumental to Square and Cash App”.

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