Coutts facing legal action over Farage case
Nigel Farage is taking legal advice after Coutts revealed private information about the GB News presenter to the BBC. The former Brexit Party leader has claimed the bank closed his account due to his politics, but Coutts told the BBC Farage had fallen below the £1m minimum to hold an account. “Quite why a bank thinks ethically or legally they can discuss anything about my financial affairs with the BBC, and a wider audience, is totally and utterly beyond me.” Meanwhile, other Coutts customers say they have far less in their accounts and it’s never been a problem. The furore over rules on "politically exposed persons" has drawn out a slew of high-profile individuals who attest to having difficulties with banks, including the Chancellor, who said he had been refused an account with Monzo. Now, Jacob Rees-Mogg has said he will submit an amendment to the forthcoming Digital Markets Bill to prevent banks from blacklisting customers.
Bank bosses to be questioned over rising mortgage stress
Mortgage lenders will be questioned by MPs today as the typical rate on a two-year fixed deal is close to surpassing the high of 6.65% seen on the 20th of October last year. The average interest rate on a deal is now 6.63%. If the average two-year rate breaches 6.65%, then it will be the highest since August 2008, according to the financial information service Moneyfacts. Bankers from Lloyds, Santander, Nationwide, Skipton and Paragon will be asked by MPs on the Treasury select committee how they are helping people with much higher rates.
Top US bank watchdog outlines tougher rules for larger lenders
Michael Barr, vice-chair for supervision at the Federal Reserve, on Monday announced tougher capital rules for a broader range of lenders in a bid to shore up a financial system rocked by the failure of several regional banks earlier this year. Banks with more than $100bn in assets will need to hold more in reserve and they will no longer be able to rely on internal models to estimate some types of credit risk. Michael Hsu, acting director of the Office of the Comptroller of the Currency, backed the move saying there is "strong alignment" between federal regulators about the need for stronger capital requirements in the banking system. But Rob Nichols, president and CEO of the American Bankers Association, said the regulator had failed to “adequately consider the negative repercussions” adding that higher capital requirements “come at a cost to the economy.”
SVB Financial sues US banking regulator to recover $1.9bn
The US Federal Deposit Insurance Corporation is being sued by SVB Financial Group, which says the seizure of $1.9bn in cash by the regulator when it took over Silicon Valley Bank in March violated US bankruptcy law. The group alleges that the FDIC induced SVB Financial to keep its cash at the failed bank, only to later seize it. Now it is losing out on more than $100m in annual interest, without which it might have to seek costly and uncertain "debtor-in-possession" financing.
Central banks move gold back home after freeze on Russian assets
Central banks around the world have been increasing their physical gold reserves and ensuring they are held at home, with demand hitting an 11-year high in 2022.
City Airport’s expansion plans blocked, easyJet cancels 1,700 flights
Newham Council has blocked plans for an expansion of London City Airport due to concerns over noise pollution and other environmental impacts. London City said it was “disappointed with the decision” adding that its revised proposals would have created almost 2,200 jobs at the airport and contributed an “additional £702m in GVA to London’s economy”. Separately, easyJet has cancelled 1,700 flights scheduled for this summer, blaming at air traffic control problems across Europe.
Hunt: Reforms will boost pensions by £1,000 a year
The Chancellor on Monday set out a series of measures that he said could release as much as £75bn from UK pension plans for investment in high-growth companies. In his first Mansion House speech, Jeremy Hunt claimed average earners will be more than £1,000 a year better off in retirement as a result of the reforms while improving access to investment for British businesses. The initiative involves the UK’s largest pension providers committing to invest 5% of their so-called default funds for defined contribution pension savers to unlisted equities by 2030. This would be up from just 0.5% invested now. The Government believes this deal could unlock up to £50bn of new investment. Aviva, Scottish Widows, L&G, Aegon, Phoenix, Nest, and M&G have all signed up to the plans. The Chancellor also wants local government pension schemes to double existing investments in private equity to 10% and has set a March 2025 deadline for dozens of local authority pension funds to pool their assets so they can benefit from economies of scale. David Postings, chief executive of UK Finance, said: “We welcome the plans… These reforms will help support economic growth and bolster our capital markets by delivering more investment and making it easier for companies to grow and list here in the UK.” But Tom Selby, the head of retirement policy at the broker AJ Bell, said the fall of star fund manager Neil Woodford showed “the challenges big investments in illiquid assets can have, and investors will not thank the Government if this policy hits the value of their retirements pots”.
United Utilities agrees £1.8bn pension deal with L&G
FTSE 100 water company United Utilities has struck a £1.8bn deal to sell part of its pension liabilities to Legal & General, which will make future payments to members of the scheme. A United Utilities spokesperson said: "United Utilities has a strong balance sheet and, significantly, a fully funded pension scheme. As a consequence of this robust financial position, the pension scheme trustees have taken the next step in their de-risking strategy and are insuring around two thirds of the pension liabilities with Legal and General to ensure even greater long term security of the schemes.”
FCA issues warning over unregistered crypto ATMs
The Financial Conduct Authority (FCA) has issued a warning about the risks associated with using unregistered cryptocurrency ATMs. The FCA is cracking down on these machines in the UK and has been inspecting suspected locations. Unlike traditional ATMs, crypto ATMs are not connected to a bank account and operate illegally. Users risk losing their funds and have no effective channels of communication with the operators. The FCA advises against using these machines, as they offer no protection and may be operated by criminals. Cryptoasset exchange providers in the UK must be registered with the FCA.
MEDIA & ENTERTAINMENT
BT CEO Jansen confirms he's quitting within 12 months
BT has confirmed that Philip Jansen, its chief executive of more than four years, will step down in the next twelve months. Adam Crozier, BT’s group chairman, said the board was prepared for the succession and would update the market on its progress over the course of the summer while “all appropriate candidates are being considered”.
Future launches buyback
Magazine publisher Future has launched a £45m share buyback in a move the London-listed company said would provide greater flexibility to deliver value for shareholders, while still maintaining a strong balance sheet.
DWF shares surge amid takeover talks
Shares in legal services company DWF rose by 40% on Monday after the firm revealed it was in talks with London-based Inflexion Private Equity Partners regarding a possible buyout. DWF reported annual revenue of about £350m pounds for fiscal year 2022.
HSBC downgrades property companies
HSBC downgraded a slew of property companies on Monday warning the industry is facing a “particularly precarious” period as higher interest rates point to “another round of asset price mark-downs across the sector”. The bank downgraded Land Securities Group and British Land two steps to the equivalent of a “sell” rating due to their “higher exposure” to the retail and office sectors.
Retail sales in Britain rise as warm weather boosts spending
Retail sales in Britain rose last month as warm weather boosted spending on barbecue food, swimwear, beach towels, outdoor games and garden furniture. Sales rose by 4.9% compared to May's 3.9% and a 1% fall in the same month last year, according to the British Retail Consortium (BRC). Like-for-like retail sales grew by 4.2%, up from 3.7% in May. Separate figures from Barclays showed consumer spending on debit and credit cards rose 5.4% year-on-year in June, with spending on groceries up 9.5%, the most since February 2021.
Lush blames Brexit for sales fall
The ethical cosmetics retailer Lush on Monday reported a 28% drop in sales in the year to June 2022 on a year earlier. This compares with a 10% fall recorded in the UK. Mark Constantine, co-founder and chief executive of Lush, said: “Is Brexit to blame? Our popularity in Europe has certainly waned since Brexit and we need to rebuild the love for our UK owned brand across Europe.”
Bailey and Hunt join forces to demand UK wage restraint
In his Mansion House speech last night, Andrew Bailey warned that further interest rate rises could be on the way as inflation remains “unacceptably” high. The Bank of England governor said Threadneedle Street had to “see the job through” explaining that the “unexpected resilience” of Britain’s economy had exacerbated wage and demand pressures, contributing to “sticky” high inflation. Speaking at the same dinner, Jeremy Hunt said he and Mr Bailey would do “what is necessary for as long as necessary to tackle inflation” and bring it back to the Bank’s 2% target. The Chancellor said: “That means taking responsible decisions on public finances, including public sector pay, because more borrowing is itself inflationary.” Bailey said he expects lower energy prices will help headline inflation fall markedly over the rest of the year and that lower commodity prices should feed through to lower food prices too.
Morgan Stanley: UK companies are cheapest in the world
The gloomy sentiment towards the UK has left British companies heavily undervalued, according to Morgan Stanley. Analysts at the American investment bank said that already cheap UK assets had been discounted further in the face of investor reluctance, leaving British stocks and bonds the cheapest in the world relative to the returns they generate. However, analysts said the current pessimism could shift quite meaningfully over the next few months if inflation starts to drop.
Bitcoin could top $100,000 by end of 2024
Analysts at Standard Chartered think bitcoin could soar to well over $100,000 next year driven by “miners” hanging on to more coins. The bank’s head of crypto research, Geoff Kendrick, expects the cryptocurrency’s price to rise to about $50,000 by the end of this year. Should this happen, Kendrick calculates that only between 20 and 30% of bitcoin mined will be sold, potentially reducing the supply by roughly 250,000 each year.