UK banks targeting fintech market
According to new research from Lloyds Bank, banks and financial services firms are increasingly tapping into the booming fintech space as a way to future-proof their business. Almost half (46%) of UK financial services firm are targeting acquisitions and partnerships with fintechs in the next year – up from 32% last year. Of those firms planning fintech M&A, developing new products and services was the biggest driver of their plans, with 66% citing it as a top priority. Improving client experiences followed at 53%, followed by driving growth at 49%. The research also showed that 77% of UK financial services bosses said that technology, automation and digital investment is a “top strategic priority” for the year ahead.
Expect a knock from the FCA
The Financial Conduct Authority has told bankers and traders they could expect a visit from the regulator at their homes as the City watchdog set out how it would oversee shifts towards remote working. “It’s important that firms are prepared and take responsibility to ensure employees understand that the FCA has powers to visit any location where work is performed, business is carried out and employees are based (including residential addresses) for any regulatory purposes,” the FCA said. “This includes supervisory and enforcement visits.”
Private equity salaries rise to £152k
The salary for junior staff at private equity companies has risen to £152,000, a jump of 52% compared to two years ago. Data from headhunters firm Heidrick & Struggles show that in 2019, private equity professionals across Europe with only two years in the industry were paid, on average, just under £100,000 in salary and bonus. For those with two to four years of experience, a salary of around £181,000 has become the sector’s average, a jump of 42% over the past two years. Senior private equity professionals are taking home more than £512,000, an increase of 21%. The leap in salaries illustrates the intensifying war on talent in the financial services space, City AM reports.
Founders step down at KKR
Henry Kravis and George Roberts have stepped down after nearly half a century in charge of KKR, the private equity firm they founded with their mentor Jerome Kohlberg in 1976. They will stay on as co-executive chairmen and Joe Bae and Scott Nuttall, who have served as the co-presidents of KKR since 2017, will become co-chief executives, effective immediately, the firm said.
Elliptic in $60m funding round
Investors including SoftBank and Wells Fargo's venture capital arm have invested $60m in Elliptic, which tracks the movement of cryptocurrencies on blockchain to help financial crime compliance. It plans to invest in its global network and team, as well as continuing R&D, it said.
Brussels eyes new rules to tighten grip on branches of non-EU banks
The European Commission is preparing to grant regulators permission to force foreign banks to turn their European branches into subsidiaries, as part of moves to implement Basel III standards. The change is expected to only apply to large branches with at least €30bn worth of assets. Barney Reynolds, head of financial services at Shearman & Sterling, argued that the latest discussions were "all part of an ongoing attempt to grab business through regulation" and could backfire. "It's hard to think such an approach will work, since the money will look for a home that does not seek to control it to the degree the EU would wish," he added. "Also, subsidiaries are embroiled in underwriting the Eurozone's massive risks, whereas branches are not. Ultimately, these steps are likely to be self-defeating."
EU launches first green bond
The European Union has hired BofA Securities, Credit Agricole, Deutsche Bank, Nomura and TD Securities to lead the sale of its first ever green bond. The 15-year green bond, due February 2037, will raise €12bn ($13.87bn), memos from two lead managers seen by Reuters showed.
Pod Point to float on London Stock Exchange
Electric vehicle (EV) charging firm Pod Point is planning a London IPO by mid-November. The EDF-owned company is expected to have a premium listing with a 25% free float.
Energy costs could force glassmakers to shift production overseas
UK glassmakers are considering whether to close British plants and relocate abroad after gas prices surged to up to ten times higher than usual. Dave Dalton, chief executive of industry body British Glass, said: "Fundamentally businesses are going to vanish offshore, and a lot of these businesses are controlled from elsewhere in the world.” Builders warned that moving manufacturing out of the UK would lead to higher costs and longer waiting times for materials.
EU and UK need to work together on finance
Catherine McGuinness, Chair of the Policy & Resources Committee at the City of London Corporation, says in City AM that it is time for the EU and the UK for move on from the trials of Brexit and establish a new “Entente Cordiale” and develop a new, close partnership between the City and Europe, “particularly when it comes to financial and professional services.” McGuinness goes on to say that a “key area where we need to cooperate is sustainable finance. With less than one month to go until the COP26 summit in Glasgow, the financial sector is working to support the transition to net zero and ensure it is resilient to the risks of climate change.” The City of London Corporation and Green Finance Institute are hosting a Summit at Cop26 to mobilise private finance and McGuinness calls for greater cross-sector and cross-border collaboration, particularly on ESG disclosure and making it easier for private capital to invest in climate change mitigation and resilience.
Lord Hammond joins London crypto firm
Philip Hammond, the former Conservative chancellor, has been hired as a senior adviser to London-based crypto trading firm Copper, which was founded in 2018 and is backed by Brevan Howard's billionaire co-founder Alan Howard.
AstraZeneca COVID-19 drug study results released
AstraZeneca's experimental COVID-19 drug has helped cut the risk of severe disease or death in a late-stage study, the drugmaker has said, a boost to its efforts to develop coronavirus medicines beyond vaccines.
Johnson backs plan for industry bailout
Industries struggling with high gas prices could apply for state-backed bailouts after Boris Johnson backed Business Secretary Kwasi Kwarteng in his push for support for UK industrials. The Treasury had previously insisted that the Government had no plans to step in but Rishi Sunak is now considering a rescue plan to help the steel industry and other energy-intensive sectors threatened with closure to stop them shutting down over winter when energy prices are expected to remain high. “This is a problem that industry is facing now,” a senior Whitehall figure said. “There is not a huge amount of time to get this sorted before factories start shutting down and thousands of people face losing their jobs.”
German investors boost Square Mile property
German investors have ploughed £847m into City of London property so far this year, accounting for one in five transactions. The inflow is the second-highest level since 2013 and is 59% higher than last year.
Fuel crisis drags on retail sales
The latest British Retail Consortium study of performance in the retail sector shows that total sales increased by 0.6% in September against the same month last year, compared with an average of 3.1% growth for the past three months. BRC chief executive Helen Dickinson said: “September saw the slowest retail sales growth since January, when the UK was in lockdown. There are signs that consumer confidence is being hit as the fuel shortages, combined with wetter weather, had an impact in the second half of the month.” Separate data from Barclaycard showed that September’s spending was 13.3% higher than it was in the same period in 2019, but it was being driven by spending on essential items such as fuel, up by 11.1%, and supermarket shopping, up 14.7%. Barclaycard also found that 90% of British households were concerned that rising prices and costs would negatively affect their finances.
Asos issues profit warning as chief executive departs
Asos has confirmed its chief executive Nick Beighton is to depart with immediate effect as the online fashion retailer warned that that its profits would be hit by increased costs and disruption to the supply chain. His departure came as Adam Crozier prepares to step down as chairman next month.
BoE “no longer an independent body”
Writing in the Times, Andrew Sentance, a former member of the Bank of England’s monetary policy committee, asserts that the Bank of England’s monetary policy committee “appears to be handicapped by the court of public opinion.” He continues: “It has not responded at all to the emerging monetary policy threats. In fact, no member of the MPC has voted for a rise in interest rates despite the emerging inflationary pressures. It is no longer an independent body that sets its own course.” Sentance concludes: “It is time for interest rates to rise, but for taxes to be held down. That is the way to ensure we have a solid recovery and head off inflationary pressures.”
Investors crank up bets on UK interest rate rises
The Bank of England is likely to increase rates in December, investors believe, having increased their bets on Monday after two BoE rate-setters pointed over the weekend to increased risks stemming from rising inflation.
Call for mandatory disclosure of net-zero plans
Companies including BT, Kingfisher, Tesco, Aviva and Santander have written to the Chancellor and the Business Secretary ahead of the climate Cop26 summit in Glasgow demanding the Government make the disclosure of net-zero plans mandatory for large companies, with a clear time line for rolling out this policy by 2025.