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Daily News Roundup: Thursday, 9th June 2022

Posted: 9th June 2022

BANKING

Citizens Advice calls for BNPL regulation

Citizens Advice is calling for more regulation to protect consumers after the UK’s Buy Now Pay Later market expanded further on Wednesday with Zopa jumping in with its own scheme. Apple is set to join in the autumn as the market grows to £6bn with 20m Britons using BNPL as a way of shopping. Millie Harris, a Debt Adviser at Citizens Advice said many BNPL users don’t know how it works and are getting in to more debt on top of what they're already facing. "They come to rely on it much more quickly than other forms of credit. It's just a few clicks at a checkout.” Clare Moriarty, CEO of Citizens Advice, added: "Buy Now Pay Later is part of the credit industry and must urgently be regulated as such.”

TSB joins forces with FinTech Scotland

TSB has teamed up with FinTech Scotland in a bid to find new financial technology partners. The bank is launching an innovation lab in Edinburgh with the body and is inviting fintech-focused SMEs to collaborate to address “relevant customer challenges”.

Barclays hires Rossman for activism defense

Barclays has hired veteran Lazard banker Jim Rossman as its global head of shareholder advisory as the British bank expands its investment banking franchise.

PRIVATE EQUITY

Wealthy families invest more in private equity

An annual report by Swiss bank UBS shows the world's wealthiest families put more money into private equity than in traditional asset classes like fixed income and stocks in 2021 as they sought to boost investment returns. Direct allocations from 221 family offices overseeing $493bn in assets as a percentage of their total investments rose to 13% in 2021 from 10% the previous year while indirect allocations were 8% last year versus 7%. Meanwhile, fixed income investments declined by two percentage points in 2021 to 11% from the previous year while equity investments were steady around 24%. Real estate investments, a traditional favourite, slipped to 12% last year from 13% in 2020.

INTERNATIONAL

Credit Suisse warns of second-quarter loss

Credit Suisse has warned it will probably report a loss in the second quarter as market volatility from the war in Ukraine, global inflation and the tapering of coronavirus pandemic stimulus measures hits its investment banking division. Credit Suisse said: “As we look forward to the second half, the year 2022 will remain one of transition for Credit Suisse. Given the economic and market environment, we are accelerating our cost initiatives across the group with the aim of maximizing savings from 2023 onwards.”

UniCredit well placed to weather Italian debt volatility

UniCredit’s finance chief Stefano Porro has said the bank is well placed to withstand volatility in Italian government bonds. The premium Italian bonds pay over safer German Bunds hit a two-year high this month, at more than 2 percentage points. But Porro went on to say he did not anticipate a structural widening in Italian bond spreads, stressing foreign investors held only a fifth of the overall debt and the ECB stood ready to counter unwarranted fragmentation in funding conditions among euro zone countries.

HSBC shuts trade start-up Serai

HSBC has shut down its Serai platform – its Hong Kong-based trading subsidiary that connected small-and-medium-sized apparel makers with component suppliers worldwide. "The decision to wind down Serai follows a thorough business review and is a purely commercial decision," HSBC said.

FINANCIAL SERVICES

Insurers need to do more to prepare for climate change, BoE says

The Bank of England has said that insurers need to plug data gaps to be better prepared for the impact of climate change on their operations and further work may be needed on how much capital they should hold. “Addressing data gaps for climate analysis is a priority if insurers are to deliver effective climate risk management, and to innovate and develop products to support the transition to a more climate-sustainable pathway,” Stefan Claus, BoE technical head of division, told the Association of British Insurers. The ABI added that nearly 90% of life insurers and more than half of general insurers in Britain are part of the United Nations' “Race to Zero” campaign to cut carbon emissions. However, it added more action was needed.

Hedge funds complain over LME nickel chaos

The Managed Funds Association, which represents 150 hedge funds, has filed a formal complaint against the London Metal Exchange for cancelling thousands of nickel trades in March following an unprecedented spike it the price of the metal. “The LME has undermined confidence in its ability to oversee markets by failing to perform its regulatory obligations to maintain an orderly market, manage conflicts of interest and protect investors in the nickel market,” the association said in its letter. The move comes after investment group Elliott and a second US firm, Jane Street, brought claims against the LME.

UK financial regulators to directly oversee cloud services

The Financial Conduct Authority will have powers to make onsite visits to oversee cloud computing firms like Amazon, Google and Microsoft that provide “critical” services to financial firms, the Bank of England said yesterday. “This will enable the regulators to ensure that services critical third parties provide to firms in the finance sector are resilient, thereby reducing the risk of systemic disruption,” the BoE said in a statement.

LEISURE & HOSPITALITY

Hospitality firms warn rail strikes will be devastating

The national rail strikes planned for later this month will have a devastating impact on the theatre, live music and hospitality industries, trade bodies have warned. In a joint statement, hospitality leaders said a strike would be "hugely damaging" and felt "counterintuitive when we are facing so many other challenges". Michael Kill, chief executive of the Night Time Industries Association, which represents night clubs, bars and festivals, said the strike announcement had sent a "shockwave throughout the industry".

MANUFACTURING

Fertiliser factory closure leaves UK food supply 'vulnerable'

Domestic fertiliser supplies are now under threat after the permanent closure of one of only two major fertiliser plants in Britain, farmers and meat processors have warned. CF Fertilisers will shut down its Ince manufacturing plant near Chester, which provides crucial supplies of nitrogen fertiliser and carbon dioxide, after energy bills and high environmental taxes made the plant unsustainable. CF Industries will keep its Billingham facility open after the Government secured a rescue deal with the company's suppliers. 

PROFESSIONAL SERVICES

Mishcon de Reya delays IPO

Mishcon de Reya has put its IPO plans on hold citing market conditions. The London-based firm first raised the prospect of a market listing in 2019 and made its plans official last September. Insiders said a future listing was not off the agenda completely, however.

REAL ESTATE

House prices hit record high in May

The latest Halifax house price index shows the average house price hit a record high of £289,099 in May. Russell Galley, Halifax managing director, said: “The average cost of buying a home in the UK is up 1%, or £2,857, on last month, and has now risen for 11 consecutive months. Annual growth also remains in double digits, at 10.5%, although this is the slowest rate of growth seen since the start of the year.”

ECONOMY

UK growth set to be weakest in developed world, OECD says

The Organisation for Economic Co-operation and Development (OECD) has urged the UK Government to cut tax rises in order to revive the stagnating economy. The body predicted that the UK will be the worst-performing economy of any nation in the developed world apart from Russia in 2023. In its bi-annual economic outlook, the club of rich nations said recent increases in income and business taxes will contribute to a slowdown that will see GDP fail to advance in 2023. “The Government should consider slowing fiscal consolidation to support growth,” it said. The economy will expand 3.6% this year - the second-fastest rate among the G7 after Canada - before sinking to zero growth in 2023. Every other G7 country will grow by more than 1% in 2023, the OECD forecasts. Inflation is expected to average 8.8% this year and fall to 7.4% in 2023. Ruth Gregory, chief UK economist at Capital Economics, said Britain was now “dangerously close” to a recession but was more upbeat that the OECD, forecasting an expansion of 1.5% with inflation falling from 10% this year to 4.8% next year as price pressures on energy begin to relent.

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