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Daily News Roundup: Thursday, 8th June 2023

Posted: 8th June 2023


UK banks race to hire AI talent

UK banks are racing to hire AI talent, with Barclays hiring over 1,000 AI staff between February and April, according to data from insights business Evident. The 60 largest North American and European banks now employ around 46,000 people in AI development, data engineering, and governance and ethics roles, with as many as 100,000 global banking roles involved in bringing AI to market. However, there are fears that UK banks could be falling behind their US counterparts, with American giant JPMorgan hiring twice as many AI-related jobs as any of its rivals. Alexandra Mousavizadeh, Evident's CEO, said, "AI is the one area of banking where people are being brought on in growing numbers, and our data shows that banks are competing ferociously to secure the best talent."

From 2024, banks will be required to reimburse APP scam victims

The Payment Systems Regulator (PSR) has said banks will be required to reimburse scam victims who have been tricked into paying fraudsters from next year. The regulator said the new requirements will prompt a “step-change” in the culture of payments, improving fraud prevention and focusing all firms on protecting people. Under the plans, the majority of victims of authorised push payment (APP) fraud will be reimbursed within five business days and there will also be additional protections for vulnerable customers, according to the PSR. New rules around Faster Payments will mean both sending and receiving firms in the UK will share the costs of reimbursing victims equally.

Mortgage repossessions jump by a quarter

Figures from UK Finance show the number of mortgage repossessions across Britain has jumped by more than a quarter as households struggle with the rising cost of living. There were 1,250 repossessions in the UK during the first three months of the year – 27% higher than the 980 from the same period in 2022. UK Finance said in a statement: “Any increase in arrears, even a modest one from a low base, is of concern and the industry is focused on helping customers navigate periods of increased financial stress. Our new analysis shows that there is a range of factors driving arrears, depending on differing household circumstances, and this argues for lenders retaining a flexible, tailored approach to supporting borrowers through financial challenges.”

Investec doubles stake in Capitalmind

Investec has acquired a majority stake in boutique dealmaking firm Capitalmind, doubling its stake in the smaller firm and merging its dealmaking and corporate finance teams. The tie-up creates a "leading provider of M&A advice in Europe" with 129 dealmakers operating as one team. The acquisition is consistent with Investec's European growth strategy and commitment to growing its capital light revenue base. The consolidation of smaller investment banks has accelerated amid a deals drought, with Cenkos and Finncap in the UK among those to consolidate this year.

UK's newest bank Griffin raises £11m

The UK's newest bank, Griffin, has raised £11m in a funding round led by venture capital firm Mass Mutual Ventures. Griffin offers a Banking as a Service platform, allowing businesses to integrate banking services into their own offerings without needing their own banking license. The completion of the funding round comes a few months after the digital challenger secured its banking license. Regulators still need to approve Griffin's full banking license before the company can handle unlimited transactions.

Santander targets post-Brexit trade

Santander is targeting British companies grappling with post-Brexit trading problems as it chases an edge in the competitive corporate lending sector, going head to head with the likes of HSBC. Santander's Navigator platform seeks to match clients with export ambitions to possible partners, customers and suppliers across the bank's global network.

Barclays reviews global payments activities

Barclays is reviewing its global payments activities as part of a broader review into how it allocates resources. The bank is considering whether some of the payments businesses should be expanded or combined with other providers through a merger or joint venture.

NatWest partners with academics to advance innovation in banking

NatWest has partnered with the University of Edinburgh to create The Centre for Purpose-Driven Innovation in Banking, saying it will combine business insights to generate “data-driven, novel solutions for the future of banking”.


Private equity deals fail to materialise

Private equity dealmaking remained subdued last month, according to Peel Hunt, as inflation and interest rate concerns forced dealmakers to reconsider their offensive. Despite expectations of a surge in take-private activity, traditional private equity buyers were absent during the month as they reassess the outlook for interest rates in the light of persisting inflation.


Debt servicing costs for EU budget set to double in 2024

Higher interest rates will mean the EU’s debt costs will double next year – from €2.1bn to €4bn – leaving the bloc with little room to manoeuvre or provide funds for unforeseen events.

EU eyes conflicts of interest crackdown in ESG ratings rules

ESG rating agencies may face fines for conflicts of interest under new set to be proposed by the European Commission, which will require agencies to be certified by the EU’s financial regulator.

US Treasury’s $1tn borrowing drive set to put banks under strain

The FT reports on a $1trn borrowing spree by the US Treasury which traders and analysts say will increase the strain on the banking system.


New York sues Hyundai and Kia over ‘explosion’ of car thefts

Hyundai Motor and its affiliate Kia are being sued by New York City because their cars are too easy to steal. The South Korean carmakers are accused of negligence and causing a public nuisance.


Heathrow security officers announce strikes

Security officers at Heathrow airport will take part in a fresh wave of strikes this summer that could affect travellers at the UK's busiest airport. About 2,000 officers who are members of the Unite union will walk out for 31 days between 24 June and 27 August. Terminals 3 and 5 and checks for non-passengers will be affected and the action could spark queues at security, BBC News claims.


New rules for crypto firms by FCA

The Financial Conduct Authority has imposed new rules on crypto firms, requiring them to warn customers that they should not expect protection if their investment goes wrong and to introduce a "cooling off" period for first-time investors. The FCA said that from 8 October, firms promoting crypto products or services will need to carry a clear risk warning in their adverts. Companies advertising digital assets, including cryptocurrencies such as bitcoin, will need to offer a pause to new investors requesting to invest in their products. Bonuses for introducing friends to a crypto firm's products will also be prohibited. Sheldon Mills, the executive director of consumers and competition at the FCA, said that "consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money."

Uncertainty over net zero deterring investment

A paper published by the Pensions and Lifetime Savings Association asserts that the lack of a clear plan for the UK economy, including relating to the so-called Green Transition, is discouraging pension funds from investing in Britain. The Telegraph points out that while pension funds remain nervous about political and regulatory uncertainty, the Government is pushing the industry to invest in riskier, illiquid assets.

Canadian fund to boost London office in show of faith in UK capital

The Canadian asset manager, Alberta Investment Management Company, plans to more than double its headcount in London and invest billions in the UK.


City Pub Group acquires further stake in Mosaic Pub and Dining Group

City Pub Group has purchased 52% of shares in Mosaic Pub and Dining Group, increasing its portfolio of high-end pubs to 52 sites across London, Wales and the South of England. It comes as City Pub Group said revenues over the year ending 25 December increased by 63% to reach £57.8m. Adjusted earnings before interest, taxes, depreciation and amortisation rose by 111% to £10.1m, while adjusted pre-tax profits nearly tripled to £3.6m.


House prices in first annual fall for 11 years

House prices have fallen by 1% compared with a year ago - the first such drop since 2012, according to the Halifax. The lender said typical house prices in May were down £3,000 on a year ago, and £7,500 lower than their peak in August with higher borrowing costs said to be hitting confidence. The Halifax said that the average UK home now cost £286,532. Analysts at Capital Economics forecast that there will eventually be a 12% drop in house prices, on the Halifax measure, from the peak last August.


OECD upgrades Britain's growth prospects

The Organisation for Economic Co-operation and Development (OECD) has forecast that the UK will dodge a recession this year but continue to see one of the highest inflation figures among G20 countries. The OECD predicted inflation would average 6.9% over 2023 for the UK, leaving the country with higher inflation than any G20 member except Argentina and Turkey. UK GDP growth is expected to be modest at 0.3% throughout the year, an upgrade from the 0.2% annual contraction it forecast in March. UK GDP would improve moderately to 1% in 2024. Unemployment is also expected to rise in the UK, reaching 4.5% in 2024. The OECD cast doubt on the UK Government’s ability to cut taxes ahead of a general election adding that it would struggle to cope with the pressure on the public finances from rising interest rates on government debt. 

UK labour market cools further in May

The UK labour market cooled further in May as starting salaries for permanent staff rose at the weakest pace in over two years, according to a survey of recruiters by the Recruitment and Employment Confederation (REC). The number of permanent staff placements dropped last month at the sharpest rate since January 2021, as REC's gauge of demand for staff fell to a five-month low. The latest official data showed unemployment rose to 3.9% in the three months to March, while annual wage growth held at 5.8%. Starting salaries for permanent staff fell to their lowest level since April 2021, although this still represented a historically sharp pace overall. 

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