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Daily News Roundup: Thursday, 8th September 2022

Posted: 8th September 2022

BANKING

Kwarteng lays out plans to City chiefs

In a meeting with top banks and insurers on Wednesday, the new Chancellor Kwasi Kwarteng relayed his and the Prime Minister’s commitment to generating growth rapidly through easy-win reforms and regaining the City’s status as the world’s leading international financial centre. The meeting was attended by senior figures including the chief executives of NatWest, HSBC, Barclays and Lloyds, as well as the bosses of the London Stock Exchange and the insurers Legal & General and Aviva. Holdovers from the EU-wide financial services regime including the Solvency II rulebook, which forces insurers to hold vast sums of cash on their balance sheets, hindering investment, and the MiFID II rulebook for trading stocks and bonds, which is widely felt to have harmed capital markets. Mr Kwarteng was also reported to have impressed on banks the importance of supporting their customers through the cost of living crisis, one insider told Sky News.

Goldman Sachs ramps up operations in Birmingham

Goldman Sachs is preparing to sign a 10-year lease on office space for up to 800 staff in Birmingham, becoming the latest Wall Street bank to expand beyond London. Gurjit Jagpal, head of the Birmingham office, said the plan would be to move into the new space in early 2024. The move comes after Citigroup said it was planning to hire 400 more staff for its Belfast office. The US bank is also close to signing a €100m deal to buy a new office site in the heart of Dublin, according to a report in the FT.

Barclays poaches StanChart's sustainable finance lead

Barclays has appointed Standard Chartered's Daniel Hanna as its global head of sustainable finance. "As the world deals with the impact of high energy prices and climate change, Barclays has a strong platform to help channel capital to the new technologies, and companies, that can help economies decarbonize and drive sustainable growth," Hanna said in a statement.

JP Morgan dismisses Boris Johnson speaking deal rumours

Reports in the press on Monday claimed Boris Johnson had been offered £2m to give six speeches at JP Morgan events. However, sources at the US investment bank told City AM that Mr Johnson has not been courted for any speaking engagements and that it is unlikely he will ever receive an offer.

PRIVATE EQUITY

Kim Kardashian launches private equity firm

Reality TV star Kim Kardashian is launching a private equity firm in partnership with Jay Sammons, a former Carlyle Group executive. SKKY Partners will seek to acquire stakes in fast-growing media and consumer companies.

GB Group surges on takeover offer

Shares in identity verification and fraud prevention firm GB Group leapt in morning trading on Wednesday after the software company confirmed it's considering a possible takeover offer from private equity firm GTCR.

INTERNATIONAL

Europe's banks dim lights amid blackout fears

European banks are stress-testing how they can cope with power shortages as the brace for power cuts and energy rationing. Sources say JPMorgan has conducted power outage simulations and has diesel generators available to ensure key offices remain up and running. Deutsche Bank, meanwhile, is shutting off hot running water in washrooms, turning down thermostats and switching off all unnecessary lighting overnight.

Euro Pacific Bank customers urged to report to HMRC

UK customers of Euro Pacific Bank have been told to hand over information about their tax affairs to HMRC following the launch of a tax evasion probe into the Puerto Rican bank. Around 600 Britons who used Euro Pacific Bank’s services have been asked to come forward after HMRC launched an investigation into offshore tax evasion and money laundering.

FINANCIAL SERVICES

FCA urges firms to ‘embed financial crime checks’ as scams rise

Sarah Pritchard, the executive director of markets at the Financial Conduct Authority (FCA), has warned that the UK’s cost of living crisis risks driving a rise in financial crime. During a speech at the Financial Crime Summit, Pritchard said the FCA has seen an increase in scams on the back of soaring costs, including “loan fee fraud, ghost broking, and false access to rebates from utility companies.” She added: “Sadly, we expect financial crime to become even more prolific during the cost-of-living crisis. The temptation for people in difficult circumstances is huge.” Ms Pritchard also said her team has been working with partners both in the UK and abroad to promote more intelligence sharing and urged firms to “embed” the use of data and technology to ward off financial crime.

Revolut axes grad jobs as it conducts sweeping cost review

Revolut has axed several graduate roles as it continues with a review of business needs as the payments firm seeks to shield itself from the economic downturn threatening fintechs. A major cost-cutting review codenamed “Project Prism” involves Revolut conducting a “full, in-depth analysis of roles and responsibilities, teams, [and] seeing what consolidation they could do on the ground”, according to one person familiar with the matter. The FT notes that fintechs have had to make swingeing cuts as macroeconomic conditions have soured, consumer spending has fallen and investors have proven far less willing to bankroll growth without profits.

Chancellor to be granted ultimate control over financial regulation

The new City minister, Richard Fuller, confirmed on Wednesday that the Government was planning to give itself powers to override City regulators, including the Bank of England if they threaten to hold up reform. Amendments to the Financial Services and Markets Bill would enable ministers to “make, amend or revoke rules if in public interest,” Fuller told MPs: “[The intention is] to bring forward an intervention power that would enable Her Majesty’s Treasury’s to direct a regulator to make, amend or revoke rules where there are matters of significant public interest,” he explained.

Parmenion to acquire £1.9bn EBI Portfolios

Investment platform Parmenion has bought Midlands-based discretionary fund manager EBI Portfolios for an undisclosed sum. The deal marks the first acquisition made by Parmenion since it was sold for £102m by abrdn in March 2021. Meanwhile, Parmenion, which has about £9bn in assets under management, is being marketed to potential strategic investors, sources have told Sky News, with an expected valuation in the region of £400m.

HEALTHCARE

Dingemans appointed chairman of Genomics

Simon Dingemans has been appointed chairman of Oxford-based Genomics. The ex-Goldman Sachs banker and former chief financial officer of GSK said on Wednesday that genomics would become “central to healthcare in the future” and that the Oxford-based company could be the leader in the “field in the development of genomically powered tools”.

MEDIA & ENTERTAINMENT

Cineworld files for bankruptcy protection in the US

The UK-based cinema chain Cineworld has filed for bankruptcy protection in the US as the company struggles under a mountain of debt. The company will undergo a “comprehensive financial restructuring” while a deal to reduce the group’s debt and lease liabilities, which amounted to almost $9bn at the end of 2021, would “result in very significant dilution of equity interests in the group”, said Cineworld, warning that “there is no guarantee of any recovery for holders of existing equity interests”.

REAL ESTATE

House prices defy gloom, rise in August

Halifax has reported that the average price of a UK home rose by 0.4% in August following a 0.1% dip in July. The rise last month takes the annual rate of property price growth to 11.5%. The average price of a home has now risen by more than £30,000 to £294,260 over the year. Kim Kinnaird, director of Halifax Mortgages, said: “While house prices have so far proved to be resilient in the face of growing economic uncertainty, industry surveys point towards cooling expectations across the majority of UK regions as buyer demand eases and other forward-looking indicators also imply a likely slowdown in market activity.” Ms Kinnaird added: “With house price-to-income affordability ratios already historically high, a more challenging period for house prices should be expected.”

RETAIL

Richemont investors back founder in fight against activist Bluebell

Shareholders in luxury goods group Richemont have rejected activist investor Bluebell Capital’s campaign to shake up the board of the Swiss company. Bluebell had also sought to restore more power to holders of the A shares, which carry fewer voting rights than the B shares owned by the family holding company of billionaire founder Johann Rupert. This too was rejected.

ECONOMY

Kwarteng assures Bank that independence is “sacrosanct”

The new Chancellor set out to calm jittery markets on Wednesday after the pound hit its lowest level against the dollar since 1985. Kwasi Kwarteng met with the bosses of Britain’s biggest banks and assured Bank of England Governor Andrew Bailey that Liz Truss’s government would not interfere with the central bank’s independence. Mr Kwarteng’s public support for the Bank’s mission to get inflation under control comes after Ms Truss promised a review of its mandate in her leadership campaign, a move some analysts say has weighed on UK assets. Mr Kwarteng said he would meet Mr Bailey weekly to "coordinate closely to support the economy" as he described the Bank's independence as "sacrosanct".

BoE: Liz Truss’s energy price freeze would peg inflation

The chief economist at the Bank of England told the Commons Treasury Select Committee on Wednesday that Liz Truss’s plan to freeze energy prices would suppress inflation, preventing it from reaching the more than 13% peak the Bank projected in August. However, interest rates may have to stay higher for longer, Huw Pill added. He explained the likely result of freezing energy bills and cutting taxes would be to raise spending in the economy and this would “probably lead to slightly stronger inflation”. Markets adjusted their bets on a 0.75% hike at the Bank’s meeting next Thursday, determining instead that a 0.50% rise is more probable following Pill’s comments.

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