BANKING
Lloyds launches record low 10-year mortgage
Lloyds has unveiled the lowest 10-year mortgage rate on record, offering a decade-long deal with an interest rate of 1.66%. This beats Lloyds' previous lowest rate of 1.99% and brokers say it is the cheapest ever offered, outdoing the previous market-leading rate of 1.74% from TSB. The Lloyds loan is restricted to remortgage customers who have at least a 40% deposit, and a £1,000 fee applies. Borrowers looking to switch away from the bank in the first five years must pay an early repayment charge of 6%. Other banks have also recently reduced rates on 10-year loans: Halifax has cut the cost of a ten-year fix from 1.93% to 1.68% for new buyers with a 40% deposit, while Leeds Building Society has launched two 10-year fixed mortgages at rates of 2.08% and 2.14%. Virgin Money and TSB also cutting their 10-year rates.
Banker awarded £2m over discrimination
City banker Stacey Macken has been awarded more than £2m for sexual discrimination. Ms Macken sued the City office of BNP Paribas and told an employment tribunal that over four years she received hundreds of thousands of pounds less than her male peers in salary and bonuses. She said that when she raised the issue of the pay disparity, managers targeted her with unfair treatment. The tribunal has ordered that Ms Macken should be paid £2,081,449 in damages. A spokesperson for the bank said: “We at BNP Paribas understand that we fell short in our duty to Ms Macken.”
INTERNATIONAL
Credit Suisse unveils new wealth management structure
Credit Suisse Wealth Management CEO Francesco De Ferrari has outlined a new structure that revamps its business areas for Europe and Latin America. Robert Cielen will head the business area combining Europe and emerging Europe, while Marcello Chilov will run Latin America and Brazil. While Christian Huber has been named chief operating officer, global CIO Michael Strobaek will take on the role of sustainability lead for the wealth management division.
CONSTRUCTION
Taylor Wimpey sees two board departures
Angela Knight and Gwyn Burr will both retire from the board of housebuilder Taylor Wimpey in April. Ms Knight, who has served as an independent director since 2016, is stepping down after being made chair of Pool Re and seeing her duties on the board of Provident Financial expanded. Ms Burr, an independent director since 2018, is leaving to chair an unnamed financial services company. The departures mean three of the ten-person board are lined-up to exit the business, with CEO Pete Redfern stepping down after almost 15 years. He will leave the board later this year when a replacement is found. Taylor Wimpey has recently come under pressure from activist investor Elliott, which wants the housebuilder to shake-up its leadership and has urged the firm to hire an external candidate as Mr Redfern’s replacement.
FINANCIAL SERVICES
Lloyd set to become interim FCA chair
Richard Lloyd, the former boss of consumer group Which?, is set to be named interim chairman of the Financial Conduct Authority (FCA), Sky News’ Mark Kleinman reports. Mr Lloyd, who has been a non-executive director of the FCA since April 2019, will replace Charles Randell as the regulator's chairman. Mr Kleinman notes that the FCA has faced criticism following the collapse of minibond issuer London Capital & Finance and is “grappling with major issues” relating to the regulation of cryptocurrencies and buy now pay later credit providers, with chief executive Nikhil Rathi currently implementing a major overhaul of the City watchdog.
FCA appoints practitioner panel chair
The Financial Conduct Authority has appointed Direct Line chief executive Penny James to chair its practitioner panel, a group tasked with gathering input from companies to inform the City watchdog’s rules. She will succeed Quilter CEO Paul Feeney on March 1, having sat on the panel since September 2020. Ms James said the panel is an “important forum for senior industry practitioners,” adding that members’ “collective experience and insight" can be called upon to help the regulator with its "strategic and operational objectives.”
UK unveils pensions dashboards deadlines
The Department for Work and Pensions has set out a timeline for the launch of the pensions dashboards. The Government says it will prioritise the connection of the largest pension schemes first, to “ensure that dashboards serve the greatest number of people as soon as possible”. Large schemes will be connected between April 2023 – September 2024, medium schemes between October 2024 and October 2025 and small and micro schemes from 2026. Under the draft proposals, pension savers would have to wait until after 2026 to see all their retirement pots in place online via pensions dashboards.
MEDIA & ENTERTAINMENT
Video game investment surges
M&A deals for UK video game makers hit £1.9bn in 2021, a 63% increase on the £1.2bn recorded in 2020, according to research. A total of 14 takeovers of UK video games makers took place in 2021, up from nine in 2020 and six in 2019. Four UK video game companies were acquired by private equity funds in 2021, compared to none in 2020 and two in 2019.
REAL ESTATE
Outright home ownership rises
Figures from the Office for National Statistics (ONS) show that the number of houses owned outright in England has jumped to 8.8m, with almost 500,000 more properties owned without a mortgage in 2020. The total is up 6% from 2019, while the number of properties owned outright rose by 1.6m between 2012 and 2020. The ONS report shows that the number of houses owned with a mortgage fell by 292,000 in 2020. There were an estimated 6.8m properties owned with a mortgage or loan, alongside 4.7m privately rented houses and 4.1m under social rent. The data also shows that the average UK house price added £25,000 in the year to November when compared to the previous year. Tim Pateman, of the housing analysis team at the ONS, said: “At the start of this series in 2012, more homes were owned with a mortgage than were owned outright, but by 2020 dwellings owned outright had become the most common.”
RETAIL
Co-op workers win legal argument in equal pay fight
Co-op shop floor workers have won a key legal argument in a battle to secure equal pay with warehouse staff, with Co-op having conceded a "comparability concession", a step towards recognising that different roles are of equal value. More than 1,600 mostly female supermarket workers have been fighting for pay parity with mostly male staff at distribution centres, who are paid up to £3 an hour more. Tom Hewitt of solicitors Leigh Day, which is representing the workers, said Co-op shop floor workers had now "cleared the first hurdle in their claims for equal pay".
ECONOMY
Rate rise is a certainty, say markets
Financial markets are betting that the Bank of England is certain to implement back-to-back interest rate rises for the first time since 2004 later this week. Futures markets have now priced in a 100% chance that the central bank will increase its base rate by 0.25% to 0.5% when the Monetary Policy Committee (MPC) meets on Thursday. Economists are convinced that the Bank will need to act because it has failed to anticipate the extent and breadth of price rises under which consumer price inflation reached a 30-year high of 5.4% in December. Economists also believe the Bank has underestimated the strength of the labour market, where job vacancies almost match the number of unemployed people for the first time since consistent records began more than 20 years ago. Andrew Sentance, a former Bank ratesetter, said that the MPC was struggling after having avoided raising rates in the second half of last year. Writing in The Times, he criticises the central bank for getting its forecasts “badly wrong” and has called for a review of the performance and conduct of the MPC.
Central banks have underestimated inflation impact
Analysis by Goldman Sachs suggests central banks have underestimated the impact of inflation and will be required to hike rates to tackle price rises. The Goldman analysts said inflationary pressures “have significantly firmed”, with this “clearest in the UK and the US”. The bank believes central banks have underestimated the stickiness of inflation, a view shared by Seth Carpenter, global chief economist at Morgan Stanley. It is noted that experts expect the Bank of England to lift rates at least four times this year, while the US Federal Reserve is forecast to increase borrowing costs five times in 2022.
OTHER
City debates climate change response
The Mail’s Lucy White says there is a “row brewing” over how 'woke' City firms should be in their response to climate change, saying investors, businesses and finance experts are debating whether firms should be more principled, “even when it affects their financial performance”. She notes that investor Terry Smith recently accused Unilever of having “lost the plot” as it “obsessed” over its sustainability credentials, with this drawing proponents of ESG investing to respond. David Pitt-Watson, an adviser to Aviva Investors and a member of the Climate Accounting Project (CAP), says companies must get better at reporting the risks of climate change in their accounts. There are, he warned, a “vast number of companies that make grand statements and then ignore climate in their financial statements.” While the CAP is pushing for more regulation of companies' statements, Matthew Lesh, head of public policy at the Institute of Economic Affairs, believes investors must make up their own minds on how prepared a company is for climate change. Meanwhile, Daniel Pryor, head of research at the Adam Smith Institute, believes that “market forces will reward those who make changes and punish those who don't” when it comes to considering climate change.