BANKING
Starling abandons plans to expand into Europe
Starling Bank has abandoned plans to expand its retail bank to Europe, saying the move would not deliver the value it would hope to see. The digital lender has withdrawn its application for a European banking licence, chief executive Anne Boden has announced. Confirming the decision not to launch a retail bank in Ireland, she said: “Sometimes changing course is the right option. My job as CEO is to constantly test our thinking against evolving circumstances and to make sure that we are delivering value and maximising potential for growth.” The memo to staff continued: "Ultimately, we felt that an Irish subsidiary would not deliver the added value we are seeking." Starling has more than 3m customer accounts, including nearly 500,000 with SMEs, and was recently valued at £2.5bn after the injection of new capital from investors.
Bank lending to firms jumps by £12bn
Data shows that banks are increasing their lending to businesses following a decline seen on the back of the Coronavirus Business Interruption Loan Scheme and Bounce Back Loan Scheme ending. Analysis shows a £12bn spike in lending for the 9 months to May, with total lending hitting £533bn. The increase marks a rebound after a 7% decline in the value of outstanding lending in the months after the pandemic support schemes came to an end.
PRIVATE EQUITY
Private equity lands deal for Euromoney
Euromoney is to be taken private after private equity groups Astorg Asset Management and Epiris were successful with a £1.6bn offer. Euromoney will be divided as soon as the sale is completed, with Astorg to own the Fastmarkets division, which provides price reporting for commodities such as metals and wood, and Epiris to take control of the asset management business, which provides research and data.
INTERNATIONAL
Goldman Sachs sees fall in profit
Goldman Sachs saw profit fall 48% in the last quarter, hitting $2.79bn as net revenues slipped 23% to $11.86bn. While sales within Goldman’s investment banking division decreased by 41% to $2.14bn, those generated by its global markets division were up 32% to $6.47bn. Fixed-income revenues climbed by 55% to $3.61bn in Q2. Goldman set aside nearly $700m of provisions last quarter, compared to the $92m released last year. David Soloman, chairman and chief executive of Goldman Sachs, said: “Despite increased volatility and uncertainty, I remain confident in our ability to navigate the environment, dynamically manage our resources and drive long-term, accretive returns for shareholders.”
Bank of America profit down 34%
Bank of America has posted a nearly 34% drop in second-quarter profit, with this driven by a slump in investment banking revenue. Profit applicable to common shareholders fell to $5.9bn for the quarter ended June 30, from $8.96bn a year earlier. Net interest income, a metric that measures the difference between the interest earned on loans and the amount paid out on deposits, jumped 22% to $12.4bn. CEO Brian Moynihan said US consumer clients “remained resilient with continued strong deposit balances and spending levels.” The bank recorded average deposits of more than $1trn, with this up 10% from a year earlier.
FINANCIAL SERVICES
US and UK to strengthen crypto regulation collaboration
Financial Conduct Authority (FCA) chief executive Nikhil Rathi says UK and US regulators will work more closely amid a focus on crypto regulation. He told the Peterson Institute for International Economics: “One area of global focus is crypto, both opportunities and risks,” adding that UK and US “will deepen ties on crypto-asset regulation and market developments, including in relation to stablecoins and the exploration of central bank digital currencies.” He said both nations “pursue a transparent, proportionate response to regulation,” with legal systems which are “rigorous in holding us as regulators to account.” Mr Rathi said that many of the issues the FCA faces “also require an international response,” adding that the City watchdog “greatly values” ongoing enforcement cooperation between itself and US agencies, including the Securities and Exchange Commission, Commodity Futures Trading Commission and Department of Justice.
FSCS ‘prepared to step in’ if advice firm cannot meet claims
The Financial Services Compensation Scheme (FSCS) says it is “prepared to step in and pay claims” if pensions advice firm Portal Financial Services – which is facing 190 claims - becomes insolvent and is unable to meet the claims itself. The FSCS said its resolution team was monitoring the business and is liaising with the Financial Conduct Authority. Portal has been asked whether it is able to pay the current 190 claims against it with the Financial Ombudsman Service but is yet to respond. The firm is FCA authorised but has applied to have its permissions struck off and is currently not accepting new business.
HEALTHCARE
Haleon falters on £30bn debut
The consumer healthcare business of GSK became the largest London listing in more than a decade yesterday, but shares in Haleon made a lacklustre start on the long-awaited debut. Haleon’s market value was towards the bottom of a range broadly between £30bn to £35bn that had been forecast by City analysts and its shares closed down 6.6%.
LEISURE & HOSPITALITY
15% of pubs facing closure
Pub bosses are urging the Government for support after a survey by the British Institute of Innkeeping found that 15% of publicans said they are facing closure. The research found that 25% of pubs said staff shortages have forced them to cut opening hours, while 75% reported losing money. The Institute is calling for cuts in VAT, business rates, energy bills and draught ale duty.
MANUFACTURING
Pro-Brexit regions more dependent on EU for exports
Brexit-supporting regions in the UK are becoming increasingly dependent on the EU for their manufacturing exports, according to a report by the trade body Make UK. Analysis of 2021 data shows that 49% of British exports go to the EU. Some of the UK regions that voted for Brexit have registered the biggest increases in the share of their manufacturing exports to the bloc. Wales saw the figure increase from 58% to 60% between 2020 and 2021, north-east England reported a rise from 56% to 58%, the east Midlands was up from 48% to 51% and the east of England rose from 46% to 48%. The analysis shows that Wales is second most reliant on the EU for exports of goods overall, followed by north-east England and Yorkshire and Humber.
REAL ESTATE
House prices hit record high of £369,968
The average house price in the UK rose 0.4% to a record high of £369,968 in July, according to Rightmove’s house price index. Rightmove said the £1,354 increase was driven by “a continuing desire to move and low numbers of homes for sale.” Year-on-year, prices have risen 9.3%, with high demand and low supply pushing up prices. Analysis by the property portal shows that first-time buyers are facing a 20% rise in mortgage payments, with typical repayments for those getting onto the property ladder set to be £163 higher than at the start of the year due to higher property prices and rising interest rates. Rightmove expects the average house price to have grown 7% by the end of 2022, up from its forecast of 5% at the start of the year.
Foreign owners hold £90.7bn worth of property in England and Wales
Just under a quarter of a million homes across England and Wales are owned by overseas buyers, it has been revealed. In the current market, that's over £90.7bn worth of property. On a regional basis, London is home to the highest value of foreign owned homes, with the 85,451 properties belonging to overseas homeowners equating to a total value of £45.3bn.
RETAIL
AO World scraps Tesco tie-up
AO World has axed its partnership with Tesco as the struggling online retailer cuts all non-essential spending in the face of financial challenges and falling sales. AO had launched five concessions inside Tesco Extra stores in 2020, and had planned to launch hundreds more. However, pandemic restrictions hit the venture almost immediately. AO was last week forced to tap investors for a £40m lifeline in the wake of a dramatic slump in its share price.
ECONOMY
Policymaker says interest rates could hit 2%
Bank of England policymaker Michael Saunders says interest rates may have to rise to 2% or higher in the next year to prevent high inflation becoming embedded. In a speech at the Resolution Foundation think-tank, he said increases “still have some way to go” in order to get inflation under control, adding that the risks of not raising rates steeply and quickly outweighed those of being too cautious. Mr Saunders, an outgoing member of the Monetary Policy Committee, said the committee “has to balance the risks and costs of tightening ‘too much, too soon’ versus ‘too little, too late’.” He added: “In my view, the cost of the second outcome – not tightening promptly enough – would be relatively high at present.” Inflation is currently at 9.1% and is expected to pass 11% later in the year. The Bank has increased rates to 1.25% from 0.1% since December.
Household spending could fall by £25bn
A study by consultants Retail Economics suggests households could cut non-essential spending by £25bn, with almost nine in 10 people intending to cut back. The report says the typical household is to cut discretionary spending by £887 between now and next April. Retail Economics chief executive Richard Lim said: "Faced with rapid inflation, rising interest rates and higher taxes, household finances are being tested from all angles."