Pandemic loan fraud `five times higher´ than typical levels
Bankers have told MPs that levels of fraud from taxpayer-backed coronavirus support loan schemes are around five times higher than typical figures. David Oldfield, chief executive of Lloyds Commercial Banking, told the Treasury Select Committee his bank has seen 3% of applications rejected, with 2% of those approved later turning out to be fraudulent and around two-thirds subsequently frozen. “That’s still a large number but as a percentage that’s about five times higher than we would normally see,” he noted. Susan Allen, chief executive of retail and business banking at Santander UK, said that of the 150,000 Bounce Back Loans taken out, “about 1%” were fraudulent, while Amanda Murphy, head of commercial banking at HSBC, said: “We’ve seen criminals this year repurpose their infrastructure and amend how they interact with us looking to exploit the fears of what comes with pandemics”. Anne Boden, chief executive of Starling, said the agreement with the Government is that as long as banks have conducted processing checks, a fraudulent loan will count as a default that can be claimed on. The National Audit Office has said taxpayers could lose as much as £26bn owing to fraud or default related to the loans.
Businesses sitting on half of coronavirus loans
As much as £21bn of taxpayer-backed coronavirus loan cash is sitting unused in firms' bank accounts, bankers have revealed, with senior executives telling MPs that around half of the £42bn handed out under the Government's Bounce Back Loan scheme for small companies is being held onto. Paul Thwaite, commercial banking chief at NatWest, told the Treasury Select Committee: “I think that demonstrates ... that some customers have exercised caution, drawn down on the lending and kept it for future spending.” Amanda Murphy, HSBC’s head of commercial banking, said that for many SMEs, “these loans provided a very important lifeline, enabled them to pay their bills… and prevented them from going into financial difficulty.” Suggesting that further support will be needed when bounce back applications close in January, Starling Bank CEO Anne Boden said: “The pandemic doesn't end when these schemes finish.”
Easy access rates down by two-thirds
Analysis shows that the typical easy access account now pays just 0.19% - a third of what it did a year ago, with Barclays, Lloyds, NatWest and HSBC among those paying just 0.01%. The average tax-free cash Isa rate has fallen from 0.87% in December 2019 to 0.27% while a typical one-year deal now pays 0.54%, down from 1.23%. The choice of products has also declined, with 1,514 savings deals, including Isas, on the market - 312 fewer than a year ago.
NatWest brings back 90% mortgages as buyer demand soars
NatWest is to once again offer 90% mortgages, with the deal open to movers as well as first-time buyers. Lloyds and Yorkshire Building Society recently resumed loans for those with a 10% deposit.
Montagu Private Equity acquires Capita education business
Tiger UK, a newly-formed company established by funds advised by Montagu Private Equity, is to acquire outsourcer Capita’s Education Software Solutions business, with Montagu to pay £298m on completion of the deal and an additional £45m once an agreed investment in ParentPay is approved by regulators.
Creval investor says Credit Agricole offer too low
Creval investor Hosking Partners said it would back the Italian bank's board as it looks to secure a fairer price for its shares from Credit Agricole, which launched a takeover bid last month. Hosking Partners, which holds 4.72% of Creval, said the French bank's €10.50 a share offer fell short of fair value and did not reflect a proper control premium.
Deutsche to leave Wall Street
Wall Street is set to lose its last bank after Deutsche Bank revealed plans to move its Manhattan office, relocating from 60 Wall Street to a building at Columbus Circle, near Central Park. The past two decades have seen an exodus of banks from the street, with Morgan Stanley moving to Broadway near Times Square in the mid-90s, JPMorgan moving to midtown in 2000, and Goldman Sachs opening a new headquarters on West Street in 2009.
Zoox electric robotaxi unveiled
Amazon-owned self-driving start up Zoox has revealed its new fully autonomous electric car, which is capable of speeds of up to 75 miles per hour with an electric battery that lasts 16 hours. The firm is currently testing its vehicles in Las Vegas and San Francisco.
SMCR effectiveness questioned
Questions have been raised over the effectiveness of the senior managers and certification regime (SMCR) after a Freedom of Information request by regulatory consultant Bovill found the Financial Conduct Authority (FCA) had opened 34 investigations since the SMCR was first introduced to the banking industry in 2016, with 11 of these closed without action and a fine enforced on one occasion. Ben Blackett Ord, chief executive at Bovill, said: "The number of investigations and enforcement actions against senior managers is important because credible deterrence is central to the FCA’s enforcement work.” He added: “The fact that there has only been one successful enforcement action so far therefore brings the effectiveness of the regime into question." Bovill believes the number of roles under the scope of the regime should be broadened to increase its success.
GoCardless secures billion-dollar valuation
Payments technology start-up GoCardless has achieved unicorn status after a funding round in which it is understood to have raised £71m. The funding means the company will be worth more than $1bn on a fully diluted basis, including share options. Stripping out those share options, its valuation stands at $950m.
Alexion bid sees AstraZeneca shares fall
AstraZeneca saw its share price fall 9.2% on Monday, with the dip coming in the wake of its surprise $39bn takeover bid for US biotech firm Alexion. The $175-a-share offer represents a 45% premium to the value of Alexion's shares before the deal was announced on Saturday.
LEISURE AND HOSPITALITY
Cruise firms call for clarity
A virtual showcase organised by cruise industry trade body CLIA has seen Nick Stace, Saga’s chief executive of travel, call for Foreign, Commonwealth and Development Office (FCDO) advice against ocean cruising rescinded by January. Chris Hackney, managing director of Marella Cruises, has urged ministers to give the cruise industry a timeframe for restarting, saying current guidance is “very vague.” Adam Goldstein, CLIA’s global chair, added that it was “disappointing” that the FCDO’s advice “continues to be as severe as it is.”
Fears over effects of pub losses in December
December’s pub sales could be as much as 90% lower than in 2019, the British Beer and Pub Association (BBPA) has warned. The Coffer Peach Business Tracker has revealed, meanwhile, that takings at drinks-focused pub chains were down almost 90% last month.
MEDIA AND ENTERTAINMENT
Codemasters at centre of bidding war
Codemasters has accepted a £945m offer from Electronic Arts, overriding a previously planned deal with US rival Take-Two Interactive. The British video games maker’s board has unanimously recommended that shareholders accept the offer from EA.
G.Network broadband roll-out proceeds
High speed fibre broadband G.Network has raised £1bn with which new telecoms infrastructure will be installed in 13 London boroughs, after the Universities Superannuation Scheme announced an investment of £295m in the group, with Investec, NatWest and other banks providing £745m of debt.
Asking prices dip in December
Figures from Rightmove show that asking prices for UK homes have fallen for the second month in a row, slipping by an average of £2,080 since last month. In December the average asking price was £319,945, down 0.6% on November. This follows a 0.5% dip recorded between October and November. The decline has been attributed in part to sellers dropping prices as they seek to entice buyers looking to take advantage of the stamp duty holiday before it ends on March 31. Scotland and Wales have seen the biggest dip in asking prices since last month. In Scotland the average asking price is £162,116, down 2.1% on last month, while in Wales it's £210,943, a drop of 1.9%. The analysis shows that homes at the top end of the market have seen asking prices decline 1.4% since November, while first-time buyer homes are down 0.1%. Year-on-year, the average asking price is up 6.6% on December 2019.
Retail footfall rose last week
Retail monitoring firm Springboard has reported that footfall increased across all retail destinations last week, rising 19.5% compared with the week earlier period, with shopping centres leading the way as visitor numbers were up 26.3%. Separate data suggests around £4.5bn was spent at the weekend, with the Centre for Retail Research saying this is on par with 2019’s figures. The total includes £2.5bn spent in shops and £1.5bn online, as well as £150m in pubs and £400m in restaurants, retail and hospitality.
Lenders urge caution over negative rates
Finance bosses have urged the Bank of England (BoE) to move with caution as it considers taking interest rates negative for the first time, with Amanda Murphy, head of commercial banking at HSBC, telling the Commons Treasury Select Committee that the Bank “does have to carefully consider whether negative interest rates have the desired outcomes”. Pointing to countries that have made the move, she added that they “haven't seen inflation rise and the growth hasn't come back as strongly as one might have hoped.” With the BoE consulting with lenders on whether they would be able to cope with negative rates, Susan Allen, chief executive of retail and business banking at Santander, said: “We're ready in many parts of the bank, but there are some legacy systems that were never built for negative interest rates.” Starling Bank CEO Anne Boden said that as it charges negative interest rates on certain euro accounts “our systems are ready”.
Industrialist warns Brexit will be like a 'slow puncture'
Juergen Maier, the former CEO of electronics firm Siemens, has warned that Brexit will hit the British economy like a “slow puncture”, with disruption to business to last well into 2021 even if a trade deal is agreed. He believes it is “going to be a pretty tough for the first six months”, adding that “those who think a deal is going to miraculously resolve the situation” are wrong. Mr Maier said the impact on the economy will be like “a slow puncture” and there will be “a slow burn” as firms gradually move bits of their production or parts of their research and development abroad. He has urged ministers to offer an “adjustment period” to allow businesses to get accustomed to new customs and standards red tape that Brexit will bring.