BANKING
Customers rank online banks ahead of high street lenders
Analysis by the Competition and Markets Authority (CMA) has found that online banks delivered greater customer service standards during the pandemic than traditional rivals. A CMA survey saw Monzo named the top provider in research that asked users how likely they were to recommend a current account to friends and family, with First Direct and Starling Bank making up the top three. Tesco Bank and Royal Bank of Scotland were ranked bottom. Lloyds Banking Group was the highest ranked of the large high street banks, in sixth place. The best providers for in-branch services were Metro Bank, Nationwide Building Society and Lloyds. It is noted that Monzo, Starling, Tesco and First Direct do not operate branch networks. A separate poll of small businesses saw mobile phone-based Starling come out on top as the most recommended provider of business accounts. At the other end of the spectrum, RBS, AIB and the Co-operative Bank were bottom of the rankings. Adam Land, a senior director at the CMA, commented: “The past year has put financial pressure on many people and small businesses, and this is the first full set of results to reflect how banks have supported customers through this difficult period.”
Green mortgages have increased five-fold in four months
The number of green mortgages available has increased five-fold since April. Data provided by broker Property Master shows that the number of green mortgages, across both mainstream residential and buy-to-let, has increased from just 78 products in April to 400 now, and are being offered by 19 lenders, taking in the majority of the high-street names.
Two thirds of Brits find mortgage process 'intimidating'
Almost two thirds of UK homeowners find the mortgage process intimidating, research has revealed. A survey of 2,000 UK adults found 40% said deciding which mortgage to get "scared them". Some 37% were kept awake by the mortgage process, while one in five admitted to crying because of it. The research carried out by mortgage technology company Twenty7Tec also found that 28% were fearful of their next mortgage application. Overall, 59% said they found getting a mortgage an intimidating process, with the figure rising to 79% among those aged 18 to 30.
Santander appoints Morgan to board
Santander has appointed former minister Baroness Morgan to the board of its UK business. Ms Morgan, a non-executive director of the Financial Services Compensation Scheme, will chair the bank’s responsible banking committee and is set to be a member of the board’s audit and risk committees. The Times notes that as chairwoman of the Treasury committee, Ms Morgan often criticised banks, particularly Royal Bank of Scotland over its restructuring division’s treatment of smaller businesses.
Nunn starts as Lloyds CEO
Charlie Nunn has begun his new role as CEO of Lloyds Bank. The former HSBC banker's appointment was announced in November and his starting date was revealed in February. He replaces Antonio Horta-Osorio, who held the position for a decade and announced he would step down once a successor was chosen.
PRIVATE EQUITY
Lenders offer cheap deals to Silicon Valley to compete with flood of venture capital
The FT says lenders are cutting prices and offering more generous terms as the look to attract start-ups, with banks facing competition from venture capital firms and venture debt providers.
INTERNATIONAL
Bank Hapoalim reports jump in profit
Bank Hapoalim has reported a higher-than-expected jump in quarterly net profit, helped by a continued reversal of provisions to protect against loan defaults during the pandemic. The Israeli lender said it earned 1.42bn shekels ($442m) in the April-June period, compared with a 133m a year before. Profit was boosted by reporting income for credit losses of 647m shekels, up from 508m in the first quarter when a successful vaccination campaign allowed Israel to begin to emerge from lockdowns, and versus second-quarter 2020 credit loss expenses of 1.13bn.
HSBC to acquire Axa's Singapore assets
HSBC is set to acquire Axa's Singapore assets for $575m, part of its strategy of scaling up its wealth-management business in Asia to boost fee income. HSBC said that the combined unit comprising HSBC Life Singapore and Axa Singapore would be the seventh-largest life insurer and the fourth-largest retail health insurer in Singapore, with over 600,000 policies in-force covering life, health and property and casualty insurance.
Bank told to publish errors
A court has ordered the Commonwealth Bank of Australia to publish notices on its website saying it overcharged interest on some accounts. Australia’s biggest lender was earlier this year fined £3.7m after an inquiry found it had misled customers and overcharged by more than £1.16m.
Deutsche appoints execs
Deutsche Bank Wealth Management has appointed three executives from Credit Suisse to work across Southeast Asia as part of an ongoing expansion strategy for the region.
FINANCIAL SERVICES
Financial sector urged to act on climate change
The financial sector is not moving fast enough when it comes to climate change, a new report has warned, saying that while the industry and its regulators have begun to consider the risks of global heating, they are not properly factoring in the full scale of the potential impact. The report, Degrees of Risk, has been published by the National Centre for Climate Restoration (Breakthrough) and warns that the financial sector’s approach to the climate crisis is similar to the 2008 global financial crisis, warning of a reliance on overly optimistic financial models. Report co-author Ian Dunlop said: “You’ve got to have the business world facing up to the fact that its survival now depends on serious action to get emissions down”.
Singer mulling IPO
Singer is set to appoint banking advisers to at a possible IPO that is likely to value the City broker at over £100m. Singer is seeking a new investor, and is expected to ask Fenchurch Advisory to investigate options with a float possible and an outright sale not entirely ruled out, though regarded as the least favoured option. Management including chief executive Tim Cockroft have significant stakes in a business that saw revenues grow from £28m to £44m in the last five years. Profits jumped from £7m to £11m, making a £100m valuation conservative.
Generations divided over triple lock reform
A survey of 2,000 savers by Canada Life reveals that almost half (46%) believe the state pension triple lock should stay as it is, despite earnings likely to surge this year. Over 50s are much more likely to want to keep the triple lock promise with 59% supporting it compared to 34% of those under 50. Baroness Ros Altmann has previously said it would be wrong to abandon the triple lock because one year’s set of figures was out of line with previous expectations but said a radical overhaul of state pension support was needed.
LEISURE & HOSPITALITY
Marston's toast trading increase
Marston's CEO Ralph Findlay has revealed that trading at the pub chain is back to 2019 levels, with suburban bars performing best while city centre venues are still lagging behind. The firm, which runs around 1,500 pubs across Britain, saw around 70% of its sites reopen in April under outdoor trading restrictions before its entire estate was able to welcome customers again in May. Total sales from May 17 to July 24 were at 92% of the levels in the same period in 2019, before the pandemic.
MEDIA & ENTERTAINMENT
Pandemic sees a surge in silver streamers
The pandemic and resulting lockdowns have driven an increase in what have been dubbed ‘silver streamers’ – older people using on-demand services such as Netflix and Amazon Prime. Data shows that the number of consumers aged between 65 and 75 with access to a subscription to a video streaming service has risen from 36% in 2020 to 57% this year. The report also shows an increase in the adoption of new technology in the 12 months to July, with 19.2m devices bought. This is 8% higher than a year earlier and marks the fastest pace of growth in a decade.
REAL ESTATE
Buy-to-let boom continues
Buy-to-let mortgage borrowing has reached a record high. There were 2.02m outstanding buy-to-let mortgages at the end of June, up from 1.65m at the end of 2014, according to UK Finance. Most new buy-to-let loans approved by lenders in the first three months of this year were for landlords remortgaging, while 28,500 mortgages of the 67,500 approved were for new properties. Mortgage broker London & Country noted buy-to-let rates remained low and demand for good-quality rental property was still at high levels. Landbay, a buy-to-let mortgage lender, said: “There has been a shift away from amateur landlords towards professional and semi-professional landlords. This has been a consistent trend and we expect it to continue.”
ECONOMY
Economists: Bank unlikely to raise rates before 2023
Economists believe the Bank of England (BoE) will wait until 2023 before raising rates from a record low, although they suggested elevated inflation and a strong economic recovery could see the Bank opt to increase rates sooner. At its August 5 meeting the BoE set out how it could tighten monetary policy but opted to continue with stimulus measures despite forecasts that inflation will hit double the Bank's 2% target by year-end. While the Bank said it would start reducing its stock of bonds when its policy rate was 0.50%, economists polled by Reuters said they believe the bank rate would reach 0.50% in 2023. While Britain's economy expanded by 4.8% in Q2 and is expected to grow 2.6% in Q3, economists suggest this would slow to 1.3% in Q4 and to 0.8% in the first quarter of 2022. On an annual basis, growth of 6.8% for 2021 and 5.4% for 2022 is expected - stronger than the 6.7% and 5.2% forecast in the previous poll. Around 85% of the respondents said the unemployment rate would take at least a year to reach its pre-pandemic level.
Recovery on the cards but challenges remain
James Smith, a developed markets economist at ING, suggests that the economic impact of the pandemic will not reverberate for as long as the hit from the financial crisis, saying it is “almost guaranteed” that the full recovery will be “considerably quicker” than after the crisis of 2008. Pointing to the fact that the economy was just over 2% smaller in June than it was pre-pandemic, he says GDP is set to recover in around two years where it took five years to bounce back after the 2008 crisis. However, Mr Smith notes that while GDP is expected to return to pre-pandemic levels of activity in early 2022, it will take much longer for the economy to get back to where it would have been had the pandemic never happened. He also warns that challenges remain in regard to whether consumer confidence will remain high and drive activity, while also noting the likelihood of increased unemployment as the furlough scheme ends and the possible impact of other Government support winding down.
OTHER
Inheritances left in savings accounts over fear of poor decisions
According to Hargreaves Lansdown, 46% of people who have received, or are expecting, an inheritance will leave it in a current or savings account as they worry about making a poor decision. A survey by the firm found almost half will leave their inheritance in cash, with 8% leaving it in their current account, while 38% put it in a savings account. It found men were three times more likely to leave an inheritance in their current account (12%, versus 4% of women), while women were more likely to leave it in a savings account. Younger savers were more likely to leave the money in a bank or building society account, with 52% of 18-34 year olds doing so compared to 41% of 35-54 year olds.