BANKING
Mortgaged households to see 3% reduction in disposable income
The average household that took out a mortgage in 2021 faces a 3% reduction this year in the amount of disposable income it has left over after home loan, credit commitments and living costs, according to UK Finance. It found most borrowers across all income brackets would still qualify for the same sized mortgage now as they did last year. However, there will be some borrowers who would not qualify for the size of loan granted last year due to the new additional costs, which may result in a softening of demand for mortgages this year, UK Finance added. While mortgage activity is expected to be strong through this year, this will largely be driven by customers coming to the end of their fixed-rate deals and looking to switch to a new rate, it added.
Lloyds supports staff with extra £1,000 in pay
Lloyds Banking Group will pay staff an additional £1,000 this summer to offset rising prices. With the cost of living spiralling in the UK, Britain’s biggest mortgage lender will make the one-off payment in August to over 64,000 employees -- covering all staff apart from senior executives. The extra pay will cost Lloyds about £64m and comes is in addition to budgeting advice and conversation with money experts under the bank’s relaunched Healthy Finances Hub program.
One in four scam victims is aged 21 to 30
Data from Barclays show young adults are the most likely age group to have been scammed in recent months, with one in four victims aged between 21 and 30. This is despite 76% of this age group saying they are confident they will not get duped. Barclays said scams often take place on tech platforms such as social media, purchase/auction websites, or dating apps, making younger people particularly susceptible.
Buyout giants join forces in battle for Together
Sky News reports on how a consortium comprising Bain Capital and JC Flowers is vying with Centerbridge and Bayview Asset Management in a fight to buy a minority stake in mortgage lender Together. Final offers are expected to be tabled next month for a stake of up to 40% in the Manchester-based lender, with the whole company likely to be valued in the region of £1.7bn.
US senator seeks answers from HSBC over banker’s suspension
Republican US senator Steve Daines has sought assurances that the suspension of HSBC’s Stuart Kirk after he questioned climate risk policy wasn’t influenced by outside parties, pointing out that this would be illegal under US law.
PRIVATE EQUITY
Workers’ windfall at KKR-owned company shows private equity shift
Sujeet Indap reports in the FT on how KKR’s equity award programme for employees of its industrial portfolio companies, and the firm’s promotion of employee ownership, marks a sea change for private equity culture.
INTERNATIONAL
Deutsche Bank investors can sue over ties to Epstein, Russian oligarchs
Deutsche Bank investors have been given permission by a US court to sue the German bank over claims it hid shortfalls in internal controls while doing business with risky, ultra-rich clients like the financier Jeffrey Epstein, Russian oligarchs and people linked to terrorism. Shareholders bringing the class action suit may now try to prove that Deutsche Bank’s know-your-customer and anti-money laundering controls were ineffective. A Manhattan judge also said shareholders may also pursue claims against the bank's CEO Christian Sewing and his predecessor John Cryan.
Italian bank shares sink on debt jitters
Investors concerned about Rome's debt costs sent shares in Italian banks down on Monday following a rise in the country’s benchmark 10-year yield to 4% - its highest since January 2014. Italy's banking index was down 3.6% by midday, having lost a quarter in value since the start of the year. Shares in Italy's biggest bank Intesa Sanpaolo were down 4.4%, and UniCredit's were down 2.5%.
China tells banks to limit executive pay under ‘common prosperity’ drive
Chinese authorities have told local and foreign banks to rein in executive pay levels and fund houses to be more socially responsible marking the latest efforts by Xi Jinping’s administration to constrain the sector.
CONSTRUCTION
Countryside up for sale after shareholder pressure
Housebuilder Countryside Partnerships has agreed to launch a formal sale process after shareholders urged the board to review the business and consider a sale. The move comes a month after the business rejected a £1.5bn offer from San Francisco-based Inclusive Capital Partners. Since rejecting the bid, Countryside said that “a meaningful number of shareholders believe that the company would be in a better position to capitalise on the opportunities ahead as a privately owned company or as part of a larger business”.
FINANCIAL SERVICES
Schwab to pay $187m after robo-advisers misled investors
Charles Schwab will pay $187m to settle with the U.S. Securities and Exchange Commission after the brokerage was accused of developing automated advisory bots that recommended investors keep a large proportion of their holdings in cash, rather than invest them in stocks or other securities. Investors stood to gain significant income if that money had been invested; instead, Schwab used the cash to issue loans and collect interest on those funds.
REAL ESTATE
Demand for new offices shifts to the north
Sirius Real Estate, which owns flexible office properties and warehouses, is reporting an uptick in inquiries from small businesses for its properties in the north of England, even as demand remains flat in London and in the south east. The shift in demand to the north of the country comes after the coronavirus pandemic prompted thousands of people to relocate from London.
RETAIL
Walmart to boost UK exporters
The I reports that retail giant Walmart is looking to recruit UK sellers to its online marketplace with access to a two-day shipping service, allowing them to reach the group's 120m-strong US customer base. The move aims to boost UK exporters amid efforts to encourage the trade of UK goods beyond the EU and strengthen the £200bn UK-US trading relationship.
ECONOMY
ONS figures reveal shock contraction of UK economy
Figures from the Office for National Statistics (ONS) on Monday showed the UK economy shrunk by 0.3% in April, missing forecasts of a rise of 0.1% and fuelling fears that the UK economy could be heading into recession. Darren Morgan, director of economic statistics at the ONS, said: “A big drop in the health sector due to the winding down of the test and trace scheme pushed the UK economy into negative territory in April. Manufacturing also suffered with some companies telling us they were being affected by rising fuel and energy prices. These were partially offset by growth in car sales, which recovered from a significantly weaker than usual March.” The news sent the pound tumbling to a two-year low against the US dollar. Despite the lack of growth, with inflation forecast to increase further in the autumn markets expect the Monetary Policy Committee to increase interest rates for the fifth consecutive time when it meets on Thursday.