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Daily News Roundup: Tuesday, 16th March 2021

Posted: 16th March 2021


Yorkshire to bring back 95% mortgages

Yorkshire Building Society will become the first lender to relaunch 95% mortgages in the mainstream market, with new deals set to open to first-time buyers. The lender will apply strict conditions on the 5% deposit deals, including ruling out flats and new-build homes. Yorkshire’s 95% deal, which will be offered through mortgage brokers, will have a rate of 3.99% fixed for five years, and comes with a £995 fee. While the Chancellor recently announced a Government guarantee scheme to encourage banks and building societies back into the low-deposit mortgage market, Yorkshire CEO Mike Regnier said he was confident the lender could shoulder the risk of the 95% deal without needing to fall back on Government money. However, he added that Yorkshire BS would not have re-introduced its low deposit mortgage unless it knew other major banks were about to join the market through the scheme, saying: “As the only lender in this market we’d struggle to meet the demand that clearly is out there”.


ABN Amro probe could see larger than expected fine

An ongoing money laundering investigation could see ABN Amro face a higher than expected fine. The Dutch lender published its annual report last week, detailing the extent of the investigation in its home market.


UBS executives in Australia resign

Sources say a number of UBS Australia staff, including top banking analyst Jonathan Mott and mining analyst Glyn Lawcock, have resigned. A report in Australia Financial Review says Mr Mott and Mr Lawcock have been hired by Barrenjoey Capital Partners, a start-up partly owned by Barclays and Magellan Financial Group.


VW looks to overtake Tesla

Volkswagen plans to halve the cost of power systems for electric cars over the next decade. An investment drive, which could see VW overtake Tesla, will see the firm build six factories capable of producing 240 gigawatt hours of batteries a year in Europe. This is enough to provide batteries for 4m cars, equivalent to more than 40% of Volkswagen Group’s annual vehicle production.


Norwegian founder plans new airline

Bjorn Kjos, the founder of Norwegian Air Shuttle, is setting up a new carrier, Norse Atlantic Airways. Mr Kjos will hold a 15% stake while former Norwegian chairman Bjorn Kise will own 12%. Shipping entrepreneur Bjorn Tore Larsen will be chief executive and hold a 53% stake.


Provident Financial faces FCA probe

Provident Financial has revealed that it is being investigated by the Financial Conduct Authority (FCA), with the watchdog looking into issues including whether the firm carried out proper affordability checks before lending to borrowers. The City watchdog will look at the “affordability and sustainability” of loans made in the year to February 2021. Provident Financial also warned that its consumer credit division (CCD) could collapse into administration unless customers agree to a reduction in compensation payments for mis-selling. The firm has seen a rise in complaints against the CCD by claims management companies, with analysis showing that it made £25m worth of payouts in the second half of 2020, compared with £2.5m in H2 2019. Provident has put aside £50m as part of a scheme to settle the jump in compensation claims, saying this would “ensure that customers with a legitimate claim get fair access to redress payments”, while noting that compensation payouts “may be significantly less than the amount claimed”.

Khan calls for financial services clarity

Mayor of London Sadiq Khan has called for the Government to provide greater clarity for the City of London post-Brexit, urging Chancellor Rishi Sunak to “address the concerns of London’s financial and professional services sector”. Mr Khan has called on ministers to secure equivalence for the financial services sector, saying this will “ensure a fair and level playing field.” He cited research from the Centre for Economics and Business Research which suggests the UK could lose £2bn of GDP each year from a smaller financial services sector post-Brexit. Mr Khan also warned that it is “essential that the Government’s immigration policy maintains and broadens the pool of international talent that industry can access.”

FCA tells Dolfin to stop regulated activities

The Financial Conduct Authority (FCA) has imposed restrictions on wealth management firm Dolfin, forcing it to cease regulated activities having identified “a number of serious concerns” around the way that the firm operates its business. The FCA flagged concern over Dolfin’s tier one investor visa business activities and financial crime controls. Dolfin will still hold client money in accordance with FCA rules. Clients will not be able to trade, withdraw or transfer money held by Dolfin without the consent of the FCA while the restrictions are in place.

Stripe sees valuation reach $95bn as funding raised

Fresh funding of $600m has seen digital payments firm Stripe become the most valuable private company in Silicon Valley, with a valuation of $95bn.

AIM float plans announced by financial software firm

ActiveOps, which provides software to banks and insurance firms, is to float on AIM later in March. The planned listing is expected to value the company at over £100m. This follows reported revenues of £20m for 2020, with Investec to act as nominated adviser, financial adviser, sole broker and sole bookrunner on the listing process.


Countries suspend use of vaccine

The World Health Organisation (WHO) has urged countries not to pause coronavirus vaccinations as several major EU countries halted their rollouts of the Oxford-AstraZeneca jab. Germany, France, Italy and Spain announced that they would temporarily stop administering the AstraZeneca vaccine until an investigation by the European Medicines Agency (EMA) was concluded. Denmark, the Netherlands, Ireland and Bulgaria had already suspended use of the jab, as had non-EU Iceland, Norway, Thailand and Indonesia, after reports of blood clot deaths. The move went against the advice of the EU's medicines regulator and the WHO, who have said the jab is safe. The EMA said in a statement that “many thousands of people” develop blood clots annually “for different reasons” and that the number of incidents in vaccinated people “seems not to be higher than that seen in the general population”.


Boost for manufacturing growth forecast

A survey by Make UK has shown strong growth plans among Britain’s manufacturers, with the sector expected to see growth of 3.9% in 2021. This marks an increase on a previous estimate of 2.7%. The survey also shows that the industry faced a 10% drop in output in 2020. ​

Fall in manufacturing revenues predicted

Insider Pro expects UK manufacturing revenues to fall by 10% this year, with lower sales, falling profits and a “painful cash squeeze” damaging the sector. Research by the firm showed that manufacturers have to find an additional £2.5bn in working capital to address the challenges they currently face, equivalent to £1.7m per firm.


App developers see earnings rise amid pandemic

App developers in the UK reported a 22% rise in earnings in 2020. The total amount made by UK developers to date, who share up to 30% of their revenues from App Store purchases, hit £3.6bn in 2020, according to Apple.

Co-CEOs appointed at games firm

Video game industry services company Keywords Studios has appointed Jon Hauck and Sonia Sedler as join interim CEOs.


Law firm mergers drop to nine-year low

Law firm mergers have fallen to a nine-year low, as the economic downturn brought about by the coronavirus pandemic has left consolidator firms wary of making acquisitions. Data shows that 107 law firm mergers were completed in 2020, down 25% on the 143 mergers that occurred in 2019 and less than half the 278 mergers that took place in 2011.


ONS: House prices defy suffering economy during pandemic

Despite most other sectors suffering in 2020, house prices bucked the trend by increasing while the economy shrank, according to a new Office for National Statistics report assessing the damage done by Covid-19. The average UK house price reached a record high of £252,000 in December 2020 — an increase of 8.5% over the year, the ONS said. The surge in house buying at the end of 2020 may reflect the pent-up demand from people who had been unable to buy during the lockdown — and changes to the types of property people wanted such as houses with gardens, the agency added. The ONS said the difference between 2008 and 2020 could be because the former crisis was largely related to “structural issues with financing mortgages… Whereas the fall in GDP in 2020 was possibly driven more by reduced opportunities to spend, caused by lockdown restrictions, rather than primarily a lack of funds.”


Thorntons to close shops

Chocolate brand Thorntons has confirmed plans to close its 61 shops, putting more than 600 jobs at risk. The retailer said it had been badly hit by the pandemic, which forced its stores to shut their doors during the crucial Christmas and Easter holidays. Thorntons will try to sell more through supermarkets and will continue to sell its chocolate online after revealing that sales through its website have increased by more than 70% compared to the previous year. It will also try to expand the range of products made at its factory in Derbyshire and increase international sales.

Iceland launches new convenience chain

Iceland is set to open a new convenience store chain called Swift, which will sell “the full spectrum of grocery” with a commitment to “faster and easier shopping”. The first Swift store will open in a former Iceland unit in Newcastle and will sell about 3,000 items including ready meals and more food on-the-go alongside frozen food.


Bailey: Recovery may be quicker than forecast

Andrew Bailey, governor of the Bank of England, says the vaccine programme could see the economy outdo expectations in the coming months. However, he added that while he now saw “upside risks” to the Bank’s growth forecasts, new COVID-19 variants may still derail the recovery. Asked what sort of recovery the UK could expect, he told BBC Radio 4’s Today programme: “I’m now more positive, but with a large dose of caution.” His comments came as a monthly Ipsos Mori poll suggested public optimism over the UK’s economic outlook is at its highest since 2015. The survey saw 43% of respondents say they thought the economy would improve over the next 12 months, compared with 41% who thought the opposite. This lifted the economic optimism index to +2, up from -31 in February.

ONS updates inflation shopping basket

The Office for National Statistics’ (ONS) inflation shopping basket has been updated to reflect the impact of the coronavirus pandemic, with the statistics watchdog adding items such as hand sanitiser and home workout equipment to the list. With the pandemic driving an increase in remote working, casual clothing has been added to the basket as demand for formal office wear has declined. While smart watches, internet controlled light bulbs and electric hybrid cars are to join the price index, ground coffee and white chocolate are among items being removed from the list. Overall, the ONS has added 17 items in 2021, removing 10 and leaving 729 unchanged.


Three-quarters of millennials seek advice

A poll of 1,000 people by Prudential found that 74% of millennials and 58% of Generation Z have seen, or are going to see, a financial adviser, with this driven by financial difficulty and a desire to start investing. It also found that 32% of Generation X, 21% of Baby Boomers and 24% of those aged over 75 said the pandemic had specifically driven them to seek advice. The research also found that 53% of adults said the financial crisis caused by the pandemic had prompted them to seek advice from a financial adviser, with 33% of those having already sought financial advice and 20% planning to do so.

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