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Daily News Roundup: Tuesday, 12th July 2022

Posted: 12th July 2022

BANKING

SVR rate tops 5% for first time since 2009

The average standard variable rate (SVR) mortgage has topped 5% for the first time in more than 13 years, according to financial data provider Moneyfacts. The average SVR is now 5.06%, up from 4.40% in December 2021. It is the highest rate that Moneyfacts has recorded since January 2009. At the end of 2021, according to industry figures, just over 1m borrowers were paying their lender's SVR and the average outstanding mortgage for these customers was about £76,000. Each 0.25 percentage point increase in rates will add about £16 a month to their repayments. Meanwhile, the average new two-year fixed rate has risen for a ninth consecutive month. At 3.74%, this is up sharply on the December 2021 figure of 2.34%, and is the highest rate recorded since mid-2013.

FCA finds small firms ‘mistreated' by lenders

The Financial Conduct Authority has ordered banks to improve the way struggling small business borrowers are handled after uncovering widespread failures to treat customers fairly. A review by the regulator found poor recording made it impossible to tell whether customers had been treated fairly; vulnerable customers were being ignored or not properly responded to; “clearly unaffordable” payment plans were being arranged and a lack of oversight of treatment of business customers from senior management. Banks with inadequate processes have been told to fix the issues urgently and where customers have been adversely impacted, lenders have been told to “put things right”.

Revolut launches ‘Learn & Earn' crypto course

Revolut is set to launch a series of short courses on its platform. The “Learn & Earn” scheme means customers can earn up to $15 in DOT tokens by taking the courses and passing a final quiz. The courses help educate customers on what cryptocurrencies are compared to fiat money; the meaning of a decentralised system; cryptography; the mechanics of the blockchain technology; and the risks associated with crypto investments. “There's a huge appetite from our customers to learn more about cryptocurrencies. ‘Learn & Earn‘ will help them better understand the trends, risks and potential opportunities associated with Crypto,” said Emil Urmashin, Crypto General Manager at Revolut.

PRIVATE EQUITY

BC Partners explores sale of IT firm Presidio

BC Partners is exploring a sale of New York-based Presidio, which could value the U.S. information technology provider at more than $4bn including debt.

Private equity: capital call financing speeds up deals

The FT looks at how private equity firms are turning to subscription line financing in order to get deals over the line.

INTERNATIONAL

Morgan Stanley reshuffles investment bank leadership

Eli Gross and Simon Smith have been elevated to co-heads of investment banking at Morgan Stanley. The pair will replace Susie Huang and Mark Eichorn, who will become executive chairs to lead a newly formed group of senior bankers that drive strategic dealmaking. Morgan Stanley co-president Ted Pick said in a memo on Monday that the changes would “marry the partnership culture of the last decade with a pivot to long-term growth”. Reuters points out that the leadership reshuffle comes at a time when dealmaking is faced with a near-term slowdown, amid fears of a recession.

Irish banks still not trusted by public

The Irish Banking Culture Board has revealed that trust in Irish banks has risen slightly from a net score of -28 last year to -25. It said: "Continued positive behaviour by retail banks, the evidence of which needs to be... felt by bank customers, is necessary to further restore public trust."

AVIATION

Wizz Air expects to cut flights

Wizz Air has said it expects to gave to cut flights over the summer due to labour shortages and strikes at European airports. Wizz CEO József Váradi had said in June the budget carrier was confident of returning to pre-COVID productivity by reaching full utilisation of its aircraft this year. However, the company said on Monday it expected to cut utilisation another 5% for the summer to reduce the impact of "ongoing external disruptions".

CONSTRUCTION

MJ Gleeson doubles home sales

MJ Gleeson has doubled its home sales over the past five years. In yesterday’s trading update, the housebuilder announced a more than 10% jump in sales to a total of 2,000 in the year to 30 June. “Notwithstanding the ongoing congestion in the planning system and the wider macro-economic environment, the board believes that the scale of pent-up demand for low-cost homes will continue to drive significant growth into 2023 and beyond,” CEO James Thomson said in a statement.

FINANCIAL SERVICES

First fully-backed GBP stablecoin launched

Blackfridge, the Isle of Man-based fintech company, has launched poundtoken – the first British-regulated stablecoin fully backed 1:1 by pound sterling. Nicholas Maybin, COO of poundtoken, commented: “Many are aware that the crypto market can be unpredictable, so when trading a stablecoin it's vital to know that you will always be able to take out what you put in.” Blackfridge is backed by Gate Ventures and FunFair Ventures.

Klarna’s value slashed by 85% in latest round of fundraising

Klarna has seen its valuation slashed by 85% to less than £6bn in its latest round of fundraising. The “buy now, pay later” fintech company, which hit a peak valuation of $46bn last year, announced the valuation after the conclusion of a difficult $800m funding round as investors continued to sour on growth-chasing fintechs. Additionally, investor enthusiasm for buy now, pay later firms has been waning as consumers struggle to cope with the cost of living crisis and the risk of defaults on payments rise. Rivals such as Apple have also moved into the market with products like Apple Pay Later.

Wealth management booms as the rich get richer but markets get choppy

A new report from Bain and Company reveals how asset managers and brokerages are shifting into wealth management as “the rich get richer” and young do-it-yourself investors come into inheritances.

Pressure grows on regulators to scrutinise ESG data providers

Pierre Bollon, an advisor to the European Commission, has added his voice to calls for ESG data and ratings providers to be regulated amid growing concerns about greenwashing in the asset management sector.

HEALTHCARE

HC-One pays £1.8m dividend to its private equity owners

Care home chain HC-One paid out a £1.8m dividend to its private equity owners last year. This is despite losses increasing to £83m from £68m a year earlier. US private equity firm Safanad is the company’s majority owner while investment firm Court Cavendish and Formation Capital both own minority stakes.

MEDIA & ENTERTAINMENT

Film and TV set designer sold

Cardiff-based film and TV set designer 4Wood has been bought by private equity firm Connection Capital in a £9m deal. Andrew Forse, director of 4Wood, said: “This is a really exciting time for the management team and a fantastic opportunity to grow our business with our new backers.”

REAL ESTATE

HSBC brokers £605m deal for iconic Cheesegrater skyscraper

Hong Kong-headquartered C C Land has secured a £605m refinancing deal for one of London’s tallest buildings, the iconic ‘Cheesegrater’, in an agreement co-ordinated by HSBC. Bank of China (Hong Kong), UBS AG, Hang Seng Bank and The Bank of East Asia joined with HSBC in providing the support.

RETAIL

Sales volumes fall steeply

Fresh data from the British Retail Consortium (BRC) show retail sales by value fell 1.3% year-on-year last month - a sharp drop on the increase of 6.7% in June 2021. However, rising prices mask a 10% year-on-year fall in sales by volume. Helen Dickinson, BRC chief executive, said: "Sales volumes are falling to a rate not seen since the depths of the pandemic, as inflation continues to bite, and households cut back spending.” Separate figures from Barclaycard showed spending rose 6.2% year-on-year last month. But most, if not all, of it is likely to be due to rising prices.

ECONOMY

Bailey hits back at claims BoE policy drove inflation

Bank of England Governor Andrew Bailey has denied Threadneedle Street's monetary policy is to blame for the inflation crisis after Tory leadership candidate Tom Tugendhat blamed the Bank’s quantitative easing programme for higher prices. Mr Tugendhat told the BBC that QE had lowered the cost of money and triggered inflation. But, in an appearance before MPs, Mr Bailey said he did not subscribe to this view, adding that if QE was responsible, “we would have much stronger domestic demand in this country than we have.” He went on to say he expected inflation to be back to its 2% target in around two years' time. Responding to questions on recent political attacks against the Bank, he went on to add that he would defend the principle of central independence arguing that it was the “cornerstone of economic policy.”

One in six households in 'serious financial difficulties'

Research conducted by Bristol University and abrdn Financial Fairness Trust has found that rising prices have pushed more people into "serious financial difficulties" than the pandemic. A total of 4.4m households - one in six across the country - are now estimated to be in such difficulties, up 1.6m over the last nine months, with single parents, renters, people with disabilities, and families with three or more children the groups facing the most difficulties. A quarter of households now have no savings, while credit card debt is rising. Mubin Haq, chief executive of abrdn Financial Fairness Trust, said the findings are "the first substantial deterioration we have seen since tracking people's finances when the pandemic started". 

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