BANKING
Banks exposed as mortgage competition hots up
Britain's banks could be hit by mortgage rates moving even lower as fierce competition in the sector continues, Morgan Stanley analysts have suggested. Alvaro Serrano, an analyst at the Wall Street bank, said: "excess liquidity and low rates have reduced funding cost differentials, leading to more widespread competition." This latest warning comes a month after Goldman Sachs said that Lloyds was the most exposed to a drop in prices, cutting the bank to "sell" as it, too, cautioned that competition was likely to cause mortgage prices to fall further. Mr Serrano agreed that "there are no signs of competition abating for now", but he was more bullish on Lloyds, Britain's biggest mortgage lender. Morgan Stanley has the shares as "overweight" - the equivalent to a "buy". With 20% of the mortgage market, the analysts think that Lloyds is in a better position than rivals such as NatWest, HSBC and Barclays.
Monzo appoints new CFO
Monzo has appointed James Davies as finance chief of the digital bank. Mr Davies is currently the FD of household repairs and insurance group Domestic & General. Prior to that he was in charge of the finance function at digital estate agent group Purplebricks and William Hill’s online division.
PRIVATE EQUITY
BlackRock raises $1bn for first foreign-run China mutual fund
BlackRock has raised Rmb6.7bn ($1bn) for its first mutual fund in China. The asset manager said it closed fundraising a week earlier than expected and brought in more than 110,000 investors.
INTERNATIONAL
European banks not prepared for ECB climate stress test
New figures show that European banks are lagging in preparation for the ECB climate stress test. A survey of 20 major European banks shows there is universal agreement among lenders that they are not prepared for the ECB’s climate stress test. The ECB has voiced its concern over European banks’ lack of preparedness for the impending financial challenges climate change poses. Banks that fail to pass the climate stress test will have to adhere to higher capital requirements, leaving less available to distribute to shareholders.
HK's SFC still watching IPO sponsor banks
Hong Kong's Securities and Futures Commission (SFC) has said it expects to penalise more brokers for misconduct over listings in the financial hub, particularly smaller firms. The fines for high-profile firms, such as UBS and Morgan Stanley, were part of a long-running campaign to improve listing standards after newly traded firms were hit by a slew of scandals. The SFC's Tom Atkinson said: ""I think the enforcement actions we've taken have done a lot to change behaviour with the large firms ... but there are still the smaller firms."
AVIATION
Rome's rescue of Alitalia breached rules on state aid, says EU
EU competition authorities have said the €900m in rescue loans the Italian government gave to Alitalia in 2017 breached state aid rules.
FINANCIAL SERVICES
SEC threatens to sue Coinbase over lending product
The SEC is threatening to sue cryptocurrency exchange Coinbase if it launches its yield-generating product called Lend, according to its CEO Brian Armstrong. Lend is marketed as a high interest savings account which allows customers to earn yields on USDC, a stable coin linked to the price of the dollar, by lending capital to borrowers. Armstrong said the company reached out to the SEC before releasing it but the regulator said it was a security and that it would “sue if we proceed to launch, with zero explanation as to why.”
PayPal to acquire ‘buy now, pay later’ provider Paidy for $2.7bn
Tokyo-based “buy now, pay later” group Paidy is to be acquired by PayPal for ¥300bn ($2.7bn). The move is part of PayPal's push into the BNPL sector, in which consumers spread the cost of goods over a small number of payments.
HEALTHCARE
Carlyle leads funding round in Japanese biotech start-up
Carlyle has led a $312m funding round for Japanese biotech company Spiber. The private equity group's ¥10bn ($91m) stake in Spiber represents the group's first non-buyout, minority investment in an unlisted start-up in Japan, where start-up funding is soaring. The round, which also includes investments from Fidelity and Baillie Gifford, will be made through a combination of the allotment of new shares and a capital infusion at a valuation of about ¥135bn ($1.22bn).
LEISURE & HOSPITALITY
Watchdog clears Viagogo and StubHub merger
The Competition and Markets Authority (CMA) has approved the £2.9bn acquisition of ticket resale website StubHub by Viagogo after US investment group Digital Fuel Capital agreed to buy StubHub’s international business.
MANUFACTURING
ICU Medical trumps US private equity with $2.7bn deal for Smiths’ medical unit
Smiths Group will sell its medical division to California-based ICU Medical for $2.7bn, rejecting a lower offer made by US private equity suitor TA Associates.
MEDIA & ENTERTAINMENT
ByteDance looks to refinance debt
ByteDance is reportedly in talks with Wall Street banks to borrow more than $3bn to refinance its debt. It is understood that the Chinese owner of short-video platform TikTok plans to take advantage of currently low interest rates to repay its debt.
REAL ESTATE
House price growth cools as tax holiday ends
The housing market cooled in August, according to the Royal Institution of Chartered Surveyors, as buyers and sellers braced for the end of the stamp duty relief. In its latest assessment of the property market, Rics said that new listings and sales had dipped again in August, as did new buyer enquiries. House prices are still rising, but the pace of growth has slowed. The findings suggest that the property market is readjusting after a record year in which it defied the broader downturn in the economy. "The latest survey evidence inevitably points to market activity taking a breather after the flurry of sales seen before the tapered stamp duty holiday withdrawal,” said Tarrant Parsons, economist at the institution. “That said, while momentum has eased relative to an exceptionally strong stretch earlier in the year, there are still many factors likely to drive a solid market going forward."
RETAIL
Pandemic boosts Dunelm sales
Dunelm has reported a 44.6% rise in profits to £157.8m for the year to June 26 and a 26.3% increase in sales to £1.33bn, after it benefited from a homewares boom during the pandemic. The retailer reported that 46% of sales are now online, up from 27% a year earlier after growing by 115% during the year. Dunelm claimed that with just a 9.1% share of the £25bn homewares market, it had significant room to increase its market share by winning new customers and encouraging them to purchase more frequently.
ECONOMY
Bailey: Staff shortages are holding back Britain's recovery
The Governor of the Bank of England has urged furloughed workers and others who have left the workforce to return to employment amid concerns that severe staff shortages are holding back Britain's economic revival. Staffing shortages have been pushing up wages with Goldman Sachs estimating that underlying wage growth had hit 5% over the summer, threatening to put more upward pressure on inflation. Speaking to MPs on the Treasury Select Committee, Mr Bailey argued that while inflationary pressures from commodity prices and supply chain disruption will ease, he now has “a bit more concern about persistence in the labour market story”. He also told MPs that the recovery was showing signs of “levelling off” now that the immediate boost from reopening the economy had faded.