Fintechs and challenger banks boosted as pandemic drives lending market shift
Research from ClearScore shows that Britons are increasingly turning to open finance, with challenger banks and fintechs tripling their share of the credit card market during the coronavirus crisis. The data also shows that such firms have seen their personal loan books increase by 50%. The report reveals that 9.3m people would use open finance to access better credit, improved offers and interest rates. It was also shown that 3.2m people are underserved by their current credit options and 3.6m people lack access to any credit products. Andy Sleigh, ClearScore’s chief operating officer, says the lending market “has been changed forever by the pandemic”, noting that fintechs and challenger banks have “embraced open finance more readily than their larger competitors, as it allows them to expand their lending footprint, manage risk better and reduce their overheads.” Mr Sleigh says it is unlikely that the trend will abate, saying: “Analysis points to increased consumer adoption of open finance which in turn could help challengers to take further market share from the high street banks.”
NatWest account offers 3% interest
NatWest is offering 3% interest through its Digital Regular Saver account, with the rate putting it among the market’s best offerings. The interest rate is available on balances up to £1,000, with savings above that seeing a 0.01% rate. The account must be paid into on a regular basis, with savers able to pay in between £1 and £50 each month. Those wishing to take advantage of the Digital Regular Saver offering must hold a NatWest current account. They can only hold one Digital Regular Saver account and joint accounts will not be allowed.
HSBC names co-heads for Asia commercial banking business
HSBC has appointed two executives to run its commercial banking business in Asia Pacific. Amanda Murphy, currently the head of its commercial banking business in the UK, will lead commercial banking operations in South and Southeast Asia, while Frank Fang, who currently heads commercial banking for Hong Kong and Macau, will continue to lead the businesses in both markets. The executives will jointly lead Asia's commercial banking business while Stuart Tait, who has been leading Asia Pacific commercial banking, will take up Ms Murphy's commercial banking role in the UK.
BNP explores sale of US subsidiary
BNP Paribas is working with advisers to assess a sale of its US arm, Bank of the West. This comes with the French bank looking to exit the American retail banking market, having struggled to compete with larger and better capitalised rivals. Sources say BNP Paribas, Europe's largest bank by assets, is looking to part ways with the retail banking subsidiary in a deal that could value it at about $15bn. JPMorgan and Goldman Sachs are reportedly preparing the US business for a sale.
Rabobank told to fix compliance procedures
The Dutch central bank has ordered Rabobank to fix its procedures for customer due diligence, with the co-operative saying it is facing a "punitive enforcement procedure". Rabobank said it had been instructed to remedy deficiencies in its compliance with laws focused on money-laundering, noting that it was too early to say whether this would result in a fine.
BBVA launches offer for Garanti
Spain's BBVA has revealed that its board has agreed to launch a voluntary takeover bid for the 50.15% stake it does not own in Turkish lender Garanti BBVA in a transaction that could be worth 25.70bn lira.
AmEx office staff must be vaccinated
American Express has said its US employees working from offices need to be fully vaccinated against Covid-19, with the firm noting: “We also expect to introduce vaccine requirements in other countries where we are permitted by law and as the situation warrants”. A memo from CEO Stephen Squeri also told employees that wearing masks or other facial coverings will be optional in spaces marked only for company use. AmEx expects to bring its full workforce back to the office on January 24.
UK expands post-Brexit loan programme
The UK has expanded the Export Development Guarantee (EDG) scheme, a post-Brexit lending programme that sees the Government underwrite loans to British exporters. The initiative, which goes through the Government’s credit agency UK Export Finance, is to be expanded to include businesses that do not currently export, but have “huge export potential”, including businesses that are not yet based in the UK. UK Export Finance said the move could “encourage companies operating in sectors in which the UK doesn’t have a strong presence” to come to the country. Announcing the expansion of the EDG scheme, International Trade Secretary Anne-Marie Trevelyan also revealed that challenger banks will be able to lend through the programme. Around £10bn of loans have been issued through the scheme since it was launched in 2019.
LV committed to Bain deal despite Royal London interest
LV remains committed to completing its buyout by Bain Capital and is not engaging with rival Royal London's reignited bid for the insurer, according to FT Adviser. It follows reports that Royal London chief executive Barry O'Dwyer sent a proposal to his counterpart at LV, Mark Hartigan, for a joint takeover of the insurer alongside Bain Capital. Meanwhile, Bain has stressed that new debt would not be added to LV as part of the takeover and that the insurer’s debt burden was actually set to fall. The private equity firm said its ambition was to increase LV’s base of policyholders to more than 2m.
FSCS pays out £5.7m over British Steel adviser
The Financial Services Compensation Scheme (FSCS) has paid out more than £5.7m on 95 successful claims against S&M Hughes, which trades as Crescent Financial, a collapsed firm which advised British Steel clients. S&M Hughes entered default back in 2020 after it was placed into liquidation in 2019. It was told to cease all regulated activities by the Financial Conduct Authority in May 2019 and sold its client book to Portfolio Financial Consultancy two months later. The FSCS has so far received 137 claims against the firm, with 33 of these in progress and nine unsuccessful. In September, the lifeboat scheme revealed it had paid out £21.5m to members of the British Steel Pension Scheme who were wrongly advised to transfer their defined benefit pensions, having made 482 decisions - with an uphold rate of 88%.
Lord Mayor: The City has work to do on diversity
The new Lord Mayor of London says more work needs to be done on diversity in the City, with Vincent Keaveny highlighting that fewer than one in 10 management roles in the financial services sector are held by black, Asian, or other ethnic minority people. Mr Keaveny, who was sworn in as Lord Mayor on Saturday, said he is “deeply proud” of the City’s work on leading the conversation on investment on the environmental element in ESG, but added: “As Lord Mayor, I want the City to lead the next conversation, to lead the work on the ‘S’ in ESG.” Noting City of London Corporation research showing that employees from less privileged backgrounds take an extra year to progress through each stage of their careers despite no evidence of poorer performance, he said: “I know that’s wrong, you know it’s wrong and I want to put an end to it.”
CMC examines plans to split business
CMC Markets is understood to be considering whether to divide its online investment group into a retail-focused trading platform and a leveraged operation. It comes after CMC unveiled plans in June to set up a wealth platform, which will allow customers to manage ISAs as well as self-invested personal pensions. Such a business would place CMC in direct competition with the likes of AJ Bell and Hargreaves Lansdown.
FRC tells firms how to carry out an audit
The Financial Reporting Council has sent accountancy firms a step-by-step guide on how to carry out an audit as the watchdog looks to improve quality in the sector. The 29-page What makes a good audit? report advises firms to ensure they have no conflicts of interest and consider the risk of fraud “particularly carefully”, among a range of best practice guidance.
Average house price drops by £2,000
House prices fell by £2,044, or 0.6%, in the past month, with estate agents reporting a lull in the number of new buyers ahead of Christmas. The average asking price fell to £342,401 in November, according to Rightmove - the biggest monthly reduction since January 2021 and only the third time prices have fallen this year. Wales, where house prices have consistently risen faster than any other region this year, recorded the biggest monthly drop of 2.4%, with the average property listed for £232,166 in November. The only region to record a month-on-month increase in asking prices was the East of England with a jump of 0.5% to £398,116. The Rightmove report also reveals that the average seller secured a buyer within 36 days in October, the quickest turnaround this year, with this driven by an ongoing shortage of properties for sale.
Amazon plans aggressive rollout of cashierless stores in UK
Amazon is reportedly planning to open more than 260 cashierless grocery stores across the UK in the next three years, which would ramp-up competition in the supermarket sector. The e-commerce giant is looking to open 60 new high-tech stores in 2022, with another 100 a year in 2023 and 2024. The retailer opened its first UK Amazon Fresh store in March this year, in West London. Since then, the company has opened six such stores in the UK, which allow customers to pick up items and leave without using a till, while their purchases are automatically charged to their account.
Bailey ‘very uneasy’ about inflation
Bank of England governor Andrew Bailey has admitted he is “very uneasy” about spiking inflation levels, telling the Treasury Select Committee: “It is not the course where we want it to be to have inflation above target.” He also said that the Monetary Policy Committee’s (MPC) recent decision to keep interest rates frozen at a record low of 0.1% was a “very close call”. Saying it makes sense to assess the impact on the economy of the furlough scheme coming to an end before opting to increase interest rates, he noted: “You can make the argument for doing it now, it is a very closely balanced argument.” Mr Bailey also suggested a rate increase is on the horizon, saying the MPC believes “it will be necessary over coming months to increase Bank Rate in order to return Consumer Prices Index (CPI) inflation sustainably to the 2% target.” While data shows that CPI inflation was 3.1% in the 12 months to September, the Office for Budget Responsibility expects the inflation rate to hit 5% in 2022 - far above the Bank's target of 2%.
AIM sees biggest growth in 15 years
The AIM market has grown by a net 13 companies since last year, with this marking the junior market’s largest increase in 15 years. Data shows that the LSE sub-market, where 750 companies are currently listed, saw 62 new companies join last year. The 8% increase in AIM-listed firms reverses a decline that has seen the market shrinking over the last 10 years. The analysis shows that over £1bn was raised from IPOs in 2020/21, up 100% on 2019/20’s total.