BANKING
BoE asks banks if they are ready for negative rates
The Bank of England (BoE) has asked banks how ready they would be for the rollout of negative interest rates, with deputy governor Sam Woods writing to commercial lenders asking what steps they would need to take if borrowing costs were pushed to 0.00001% or below zero. He said: “For a negative bank rate to be effective as a policy tool, the financial sector – as the key transmission mechanism of monetary policy – would need to be operationally ready to implement it in a way that does not adversely affect the safety and soundness of firms.” Mr Woods, head of the Bank’s Prudential Regulation Authority, called on banks to offer “specific information” on their “current readiness to deal with a zero bank rate, a negative bank rate, or a tiered system of reserves remuneration”. Meanwhile, BoE governor Andrew Bailey has said the coronavirus crisis means negative rates should be considered as part of its “tool kit” but that did not mean they would be used by the Bank. Commenting on the possibility of a negative rate, UK Finance chairman Bob Wigley said: “In deciding whether to pursue such a measure, the Bank would no doubt have due regard to the implications for banks’ business models and their ability to serve customers, which are already impacted by COVID-19.” The Telegraph suggests that negative interest rates could “spell the end of free bank accounts”.
City workers return over tax fears
City workers who opted to work abroad during the early stages of the coronavirus pandemic are being called back over fears they could incur foreign taxes. With a number of bankers said to have chosen to leave the UK and work remotely from overseas, the Mail says a warning that staying away for too long could mean they incur tax bills in the country they have temporarily relocated to has prompted “a stampede back.” The paper says Credit Suisse has warned staff of their potential liabilities, Deutsche Bank workers were told they would have to cover any additional costs and that while Goldman Sachs had not given staff a deadline to come back, most had by the end of the summer.
Staveley lowers Barclays damages claim
Amanda Staveley, the businesswoman involved in a High Court tussle with Barclays, has cut a £1.6bn damages claim down to a “maximum claim” for £771m. She says Barclays agreed to provide an unsecured £2bn loan to Qatari investors in 2008 which was “concealed” from the market, shareholders and PCP Capital Partners, a private equity firm she runs.
INTERNATIONAL
CBA well-placed to deal with COVID-19 impact
Commonwealth Bank of Australia boss Matt Comyn says the bank’s strong capital position enables it to deal with a range of scenarios as the economy recovers from the coronavirus pandemic. He noted that the bank has made more than 300,000 calls to customers with deferred loans to talk to them about their options, with it noted that deferrals stood at A$42bn as of September, down almost 40% from A$67bn in June.
AVIATION
Heathrow passenger numbers plummet
Just 1.3m passengers travelled through Heathrow Airport in September, down 82% on the same month last year. Over half of passengers last month came from destinations in the EU. Heathrow’s chief executive John Holland-Kaye says that the Government’s new Global Travel Taskforce needs to “act quickly to save the millions of UK jobs that rely on aviation”, while Robert Sinclair, CEO of London City Airport, has joined in with calls to implement airport testing, saying it would be a “shot in the arm” for the UK’s economy.
BA replaces CEO
British Airways has announced it is replacing its chief executive Alex Cruz, with Aer Lingus boss Sean Doyle stepping into the role. Mr Cruz will stay on as non-executive chairman for a transition period. Luis Gallego, chief executive of IAG, which owns BA, said: "We're navigating the worst crisis faced in our industry and I'm confident these internal promotions will ensure IAG is well placed to emerge in a strong position."
FINANCIAL SERVICES
FCA expects office and WFH equivalence
The Financial Conduct Authority (FCA) has told financial services firms that they must provide the same standard of surveillance of staff working from home as they would in an office environment. Julia Hoggart, the City watchdog's director of market oversight, said: “Our expectation is that going forward, office and working from home arrangements should be equivalent”. She added that she expects firms to have “updated their policies, refreshed their training and put in place rigorous oversight reflecting the new environment - particularly regarding the risk of use of privately owned devices." "While scenarios emerged early in the pandemic where the usual levels of surveillance were not possible, our experience suggests firms have now overcome these challenges," she said in an online speech.
ESMA set to clarify share trading
The EU’s securities watchdog expects to detail where shares listed in the bloc must be traded after the end of the transition period soon, with European Securities and Markets Authority chairman Steven Maijoor telling the European Parliament it is important for market participants to have clarity on where they can trade shares.
Europe’s highest paid graduate finance roles
Currency firm Money Transfers and jobs website Glassdoor have collated a list of Europe’s best paid graduate jobs in the financial sector, with the report showing that graduates who land roles in finance could be paid as much as £43,797. The top paying role for a new starter is the £93,379 for finance associates in Switzerland, followed by the £71,760 for trainee auditors in Liechtenstein and the £71,473 for investment analysts in Luxembourg.
PROFESSIONAL SERVICES
UK lawyers and accountants risk losing in EU deal, warns report
The House of Lords’ EU services subcommittee has warned that the UK’s professional services industry could lose EU business after Brexit, having been overlooked in trade negotiations with Brussels.
REAL ESTATE
UK house prices see rapid recovery
House prices staged a strong recovery in the third quarter, as lockdown restrictions eased. Prices rose 3.3% in the three months to September, according to the Halifax Property Index, the strongest increase recorded since the end of 2006. On an annual basis prices were 5.5% higher, the sharpest rate of inflation since the final quarter of 2016. The housing market has been buoyed by government interventions such as the stamp duty holiday introduced over the summer. Paul Smith, economics director at IHS Markit, suggested the resurgence in prices was also due to “strong demand driven by a desire for more space – either as a reaction of the lockdown or the structural economic effects of increasing home working”.
RETAIL
Retail sales up in September
The British Retail Consortium’s sales monitor shows that retail sales rose last month as shoppers started their Christmas shopping, with the biggest monthly sales rise in a decade. Overall retail sales rose 5.6% in September, compared to the same month last year, with online sales seeing 36.7% growth. The 5.6% increase is the best growth in total retail sales since December 2009. The report notes that sales between April and September were 1.1% lower in 2020 than in 2019.
SPORT
Cultural secretary bemoans Premier League ‘power grab’
Oliver Dowden, secretary of state for digital, culture, media and sport, on Monday hit back at proposals to restructure the Premier League as a “power grab” by English football’s elite clubs. The plan, backed by Manchester United and Liverpool among others, would see the Premier League divert a quarter of its revenue to English Football League clubs and provide a £250m emergency loan to help with the immediate impact of the pandemic.
ECONOMY
IFS: £40bn a year tax rises needed to stop debt ‘spiralling’
The Institute for Fiscal Studies (IFS) says the Chancellor will need to raise taxes by more than £40bn a year by 2025 to balance the books and "stop debt spiralling out of control", with government borrowing set to hit £350bn this year. The IFS’ Green Budget suggests ministers should take advantage of cheap borrowing costs to provide further support to the economy for at least 18 months. The report says the Government has increased spending on day-to-day public services by £70bn in response to the pandemic, adding that even if three-quarters of that was to stop this year, it would still add £20bn to public sector borrowing by 2024/25. IFS director Paul Johnson said: “Tax rises, and big ones, look all but inevitable, though likely not until the middle years of this decade."