BANKING
Revolut increases fees
Revolut has raised the fees for its premium plans and introduced app subscriptions for some paying members. The financial platform, which has not changed the prices of its plans since launching in the UK five years ago, will now charge £3.99 per month for its Revolut Plus plan, up from £2.99 per month. The annual fee for this plan will also increase from £29.99 to £40. Additionally, the monthly fee for the Premium subscription will rise by £1 to £7.99. Existing customers who pay monthly and do not want to see an increase can lock in their current plan price for a year by switching to annual billing. Alongside the fee increases, Revolut is offering app subscriptions for services like ClassPass and Tinder to its paying members. Tara Massoudi of Revolut said: "We're launching a unique offering, which will bring together a carefully selected bundle of lifestyle subscription services." Revolut, which has nearly 8m customers in the UK and 35m globally, last week named Francesca Carlesi as chief executive of the British arm. The fintech submitted an application for a UK banking licence in January 2021.
INTERNATIONAL
Law firm to probe FDIC ‘toxic atmosphere’ allegations
US banking regulator the Federal Deposit Insurance Corporation (FDIC) has hired law firm BakerHostetler to review allegations of widespread sexual harassment, inappropriate behaviour and discrimination. The FDIC, which is responsible for ensuring financial institutions are following regulations and protecting the public's money in the event of a bank failure, has been accused of having a toxic workplace culture, with over 20 female staff having reportedly walked out due to an alleged culture of “sexual harassment and misogyny.” FDIC chairman Martin Gruenberg has urged staff with evidence of inappropriate behaviour to come forward, insisting that harassment and discrimination are “completely unacceptable” and that the agency does not tolerate or “turn a blind eye” to it.
Eurozone growth to remain weak, says ECB VP
Eurozone economic growth will remain weak in the near term as services and the labour market weaken but nations in the bloc should not free discretionary bank buffers to ease the pain, European Central Bank vice president Luis de Guindos has said. "Macroprudential authorities should preserve releasable capital buffers to ensure that they are available in the event that conditions in the banking sector deteriorate," Mr de Guindos said in a speech on Monday. Germany and France both implemented such buffers this year and France plans to increase it from the start of next year, while the Netherlands announced plans to double the buffer next May.
Commonwealth Bank warns of slowing growth and consumer spending
Commonwealth Bank of Australia's first-quarter cash earnings remained largely unchanged, but it warned that higher interest rates were resulting in slowing growth and consumer spending. The country's biggest lender said cash net profit after tax was A$2.50bn for the quarter ended September 30, with this the same as the year earlier. This compares with a consensus estimate of A$2.45bn, according to Citi.
Mizuho reports 2.4% drop in profit
Mizuho Financial Group, Japan's third-largest lender by assets, reported a 2.4% drop in its second-quarter net profit. The bank posted a profit of 170.561bn yen in the July-September period. Mizuho also revised up its profit forecast for the full year through March to 640bn yen. This is compared to the previous forecast of 610bn yen and an average analyst estimate of 625.56bn yen.
Intesa Sanpaolo extends deadline for customers to opt out of digital lender
Intesa Sanpaolo, Italy's largest bank, has extended the deadline for thousands of its customers to opt out of switching to its digital lender, Isybank. The move comes after protests from consumer associations and lawmakers. Italy's central bank and the antitrust authority are investigating the way the bank was shifting clients to the app-based unit.
AVIATION
Emirates in $52bn Boeing order
Dubai's Emirates airline has placed an order for 95 Boeing jets worth $52bn. Emirates has ordered a range of Boeing's 777 aircraft and an additional five 787 jets. The airline is the largest operator of Boeing 777 aircraft and this order solidifies its position.
FINANCIAL SERVICES
Lloyd’s of London SPAC venture scrapped
Financials Acquisition Corp, a special purpose acquisition company (SPAC) set up to open up investment access to the Lloyds of London insurance market, is set to enter liquidation. The SPAC had unveiled plans to combine with London Innovation Underwriters and raise additional funds to deploy in the Lloyd's of London insurance market. The merger has now been scrapped, with Financials Acquisition Corp citing “insufficient” cash commitments due to volatile capital markets.
LEISURE & HOSPITALITY
Pub boss in rates relief call
The chief executive of Fuller’s says that some small pub businesses will be at risk of closure without an extension of business rates relief. Simon Emeny has urged ministers to keep the support measure in place, warning: “The hospitality sector, and in particular the pub sector, helps carry a disproportionate burden of business rates in the UK.” He says business rates relief has enabled a lot of smaller operators to keep going. The Government has frozen the increase in rates for the past three years and introduced a 75% discount on pub and retail rates for the 2023 to 2024 billing year.
REAL ESTATE
Demand for City of London office space bounces back
Demand for office space in the City of London has bounced back, according to British Land. The landlord said occupancy rates across its property portfolio have hit more than 96%, with the City “performing particularly well,” with uptake in the Square Mile 5% above the long-term average in Q3. The firm said employers are seeking high-quality properties to attract top talent amid a surge in hybrid working. Clients in the banking and financial industries are driving activity in both the City and London’s West End.
RETAIL
Avon to open first stores
Avon is set to open its first stores in the UK as part of a major push into physical retailing. The initial tranche of beauty outlets will be run as franchises by Avon representatives. Avon is also expanding its beauty range across Superdrug stores, with plans to extend throughout the entire chain.
ECONOMY
Inflation set to hit lowest level in two years
Inflation is set to fall below 5% for the first time in two years. The Consumer Price Index (CPI) for October is due on Wednesday and is expected to come in at 4.8%, with lower energy prices helping bring it down from September’s 6.7%. This will mean the Prime Minister will have met a target to halve inflation – which stood at 10.1% in January - by the end of 2023. HSBC said October’s expected rate represents “a near-normalisation in month-on-month core inflation.” The Office for National Statistics data this week is the last inflation reading due before the Bank’s last interest-rate setting meeting of 2023. ING, which predicts that CPI will “take a big leap downwards”, expects the Bank to keep rates unchanged in December, “barring any enormous upside surprises.” Matthew Ryan, head of market strategy at financial services firm Ebury, says: "Markets are expecting another significant fall in core inflation,” adding that he remains confident that the economy “will be able to eke out modest growth in the last quarter of the year.” Ashley Webb, UK economist at Capital Economics, says that after October’s decline, further falls will be “more gradual.”
Interest rates could be cut in May, say experts
The Bank of England could cut interest rates could as soon as next May, according to experts. Analysts at Morgan Stanley predict that falling energy costs will bring down inflation, paving the way for a reduction in the current interest rate of 5.25%. The Bank of England has twice voted to hold rates steady while focusing on tackling inflation. However, economists warn that keeping interest rates high during a period of zero economic growth could lead to a recession and increased unemployment.
OTHER
Whistleblower reports to HMRC surge by 47%
Whistleblower reports to HMRC have hit a five-year high after surging by 47% in the last year, according to research from law firm RPC. The number of reports rose from 106,920 in 2021/22 to 157,270 in 2022/23. Adam Craggs, head of RPC's tax disputes, financial crime and regulatory team, said a large part of the spike in reports could be linked to fraud involving the Government’s pandemic support. Data from the Department for Business and Trade shows that lenders responsible for distributing Government-backed loans during the pandemic had flagged almost £1.7bn worth of potential loan fraud at the end of June, with this up 43% from three months earlier. Mr Craggs notes that the furlough scheme “was a magnet for fraudsters with significant sums lost in the public purse,” adding that public “is understandably outraged by that, and this sense of outrage may be a driver in this large increase in reports of suspected fraud to HMRC.” RPC partner Michelle Sloane says that while HMRC currently pays whistleblowers on an ad hoc basis, standardising payments could encourage more whistleblowers to come forward, saying: “Paying informants is likely to increase the number of investigations, and will improve the quality of information HMRC receives.” In the US, the Internal Revenue Service pays whistleblowers 15% to 30% of additional tax collected as a consequence of investigations initiated by their information.