BANKING
Lloyds ends ban on cladding mortgages
Lloyds Banking Group has confirmed it is removing its requirement for blocks of flats that are five floors or taller to have an EWS1 certificate, a standard practice that had prevented some homeowners from getting mortgages. It follows the publication of new guidance from the Royal Institution of Chartered Surveyors and the Building Safety Act 2022 covering the funding to remediate cladding on these properties. EWS1 certificates are given to high rise buildings that have undergone an External Wall Fire Review. Without getting a certain rating on this form, most banks will not offer mortgages, leaving residents unable to sell. Jas Singh, the chief executive of consumer lending at Lloyds Banking Group, said: "While we have continued to lend on properties with cladding where possible, this move will really simplify things for those buying homes in properties [that have] five storeys or more (those above 11m). We hope this will continue to open up the market for those in affected properties, bringing peace of mind to homeowners."
City can be a world leader, we just need to act
The Independent’s James Moore considers what the future holds for the City of London following Brexit. After running over the various claims about how leaving the EU has harmed London’s standing as a financial centre, Moore relays optimistic sentiments from those on the inside. Chief among the requests from industry sources is that the capital should start actively courting growth companies and adjust regulations to prevent the UK moving from a global to a regional hub. “The UK can be whatever it wants, as long as it has the will and to listen and to understand how markets function.” The public policy community is finally getting this point, sources say, adding that Rishi Sunak’s ideas for turning London into a centre for green finance were also positive.
UK banks hiked pay to offset bonus cap
A research paper from the Bank of England reveals UK lenders raised pay to compensate for smaller bonuses after the banker bonus cap was imposed in 2014. “We find some evidence that confirms theoretical predictions that restrictions on the maximum variable-to-fixed remuneration ratio potentially resulted in higher fixed pay, and that longer deferral periods could have resulted in higher remuneration of the affected individuals,” the paper said. The Bank said on Monday that it would be consulting the City over how best to reshape the bonus regime after the cap is scrapped.
PRIVATE EQUITY
BlackRock plans no big changes to ESG stance
Blackrock said in an annual update on its stewardship policies that it would not be making significant changes in the way it engages with companies and votes on environmental and social issues in the year ahead. This comes despite a backlash against its stance on climate change from some conservative politicians in the US. One change the asset manager said it would make, however, was that it would offer its support for enhanced disclosures from companies exposed to risks and opportunities relating to nature. Another was to encourage companies to release reports on their sustainability performance far enough in advance of their annual meeting so that investors could properly assess the data.
Funds rush to exit private equity stakes
Money managers are selling off private equity holdings via the secondary market at a rapid rate, investors say, as asset managers cash out to cover losses elsewhere and rebalance portfolios. Analysis firm Preqin estimates the value of secondary transactions up until the third quarter was about $65bn – close to 2021's total of just over $70bn and far higher than previous years.
INTERNATIONAL
Central bankers back Basel rules for crypto exposure
Rules laid out by the Basel Committee of global banking regulators for how much capital banks should hold to cover crypto assets on their books have been endorsed by The Group of Central Bank Governors and Heads of Supervision. They will form a new section of the Basel Framework, which global regulators have agreed to put in place by the start of January 2025.
India overtakes China in M&A fees for western banks for first time
Figures show the world’s largest investment banks will earn more dealmaking fees in India this year than in China in what has been described as an historic reorientation away from the Chinese economy.
AUTOMOTIVE
Lookers chairman to step down at end of year
Lookers chairman Ian Bull will step down at the end of the year after 14 months in the role, citing personal reasons. Lookers' senior independent director, Paul Van der Burgh, will take over as interim non-executive chairman while the group looks for a permanent replacement. Non-executive director, Sue Farr, will take over from Van der Burgh on an interim basis.
FINANCIAL SERVICES
Link faces £150m claim over Woodford
A High Court judge is to rule on a bid to combine thousands of claims against the company that oversaw the fund run by Neil Woodford. London law firms Harcus Parker and Leigh Day have applied for a group litigation order in the High Court to bring together claims by nearly 3,000 investors in Woodford Equity Income Fund (WEIF), which at one stage had more than £10bn under its management. The High Court was told that it initially performed well, but by 2017, its management was “characterised by an imprudent spread of risk and, in particular, inappropriate levels of investment in illiquid, speculative, hard-to-value stocks and small-cap stocks”. Link Fund Solutions, the authorised corporate director to WEIF, is said to have “breached its statutory duties” causing substantial losses for investors.
LSEG strikes deal to buy Acadia
The London Stock Exchange Group has bought risk management firm Acadia as part of ongoing moves to grow its capabilities in both the public and private markets. Acadia provides risk management, margining and collateral services to global financial firms and enables over $1tn in collateral exchanges daily. The transaction is expected to strengthen LSEG’s provision of resilient and systemically important financial market infrastructure to its customers, says LSEG.
HEALTHCARE
Government sues PPE firm linked to Baroness Mone
The UK Government has launched legal proceedings against medical goods provider PPE Medpro with the Department of Health and Social Care (DHSC) seeking the return of £122m it paid to the company to secure 25m sterile surgical gowns in June 2020. The company has been linked to Baroness Michelle Mone, whose husband Douglas Barrowman received £65m in profits from PPE Medpro in 2020, £28.8m of which was transferred to a trust whose beneficiaries were Mone and her children. PPE Medpro claimed that the department was fighting over “contract technicalities” and the case will “show the utter incompetence of DHSC to correctly procure and specify PPE during the emergency procurement period.”
MANUFACTURING
Manufacturing output falls at its fastest since pandemic
A new survey of manufacturing businesses by the CBI reveals that output over the three months to December fell at its fastest pace since the start of the pandemic. The decline was mainly driven by a fall in production of food, drink, tobacco, paper and the mechanical engineering sectors. Anna Leach, deputy chief economist at the CBI, said: “The corrosive effect of higher inflation on demand is increasingly clear, as manufacturing output contracted at the fastest pace in two years over the last quarter. While some global price pressures have eased in recent months, cost and price inflation will likely remain very high in the near term, with rising energy bills a key concern for manufacturers.”
MEDIA & ENTERTAINMENT
Epic Games pays FTC $520m to resolve ‘Fortnite’ claims
Epic Games will pay more than $500m over claims the Fortnite developer illegally collected data on children and tricked players into making unintentional purchases.
RETAIL
Retailers may see just a modest rise in sales this month
Analysts expect retailers will see just a modest rise in sales in the final run-up to Christmas after consecutive monthly declines from September to November. British Retail Consortium chief executive Helen Dickinson said “the cost-of-living crisis means many families might dial back their festive plans.”
ECONOMY
Early retirement driving inflation and harming growth
Early retirement is stoking inflation and damaging growth while adding pressure to already strained public services, according to a report by the House of Lords economic affairs committee. Its inquiry into the 565,000 workers who left the jobs market since the start of the pandemic found that early retirement among those aged between 50 and 64 was the main driver of the trend. Although the number of people who are out of work owing to long-term illness is at a record high, much of the rise has been among people who were already neither working nor looking for work. The evidence suggests that it is an increase in the number of people retiring earlier as a lifestyle choice after the pandemic that is squeezing the supply of labour. “It is possible that people got used to different habits and ways of working during the COVID-19 pandemic, which prompted them to reflect on their careers,” said the report.
Jeremy Hunt to deliver next UK Budget in March
The Chancellor will deliver the first official UK Budget since 2021 on March 15th next year. Jeremy Hunt yesterday asked the Office for Budget Responsibility to prepare forecasts for a Budget on that date.
OTHER
New powers could allow UK to seize £1bn of dirty money
British prosecutors would be able to seize £1bn of suspect assets from oligarchs and kleptocrats under new anti-mafia laws such as those employed by Italian authorities to destroy organised crime networks. Researchers at the Royal United Services Institute (RUSI) say adopting such a law would allow investigators to confiscate property and other assets if they can show that oligarchs and kleptocrats are a national security threat because of their association with corrupt governments and individuals. Maria Nizzero, a RUSI fellow and financial crime expert, said changing the law this way would solve the Government’s dilemma about what to do with the assets seized from Russian oligarchs since Vladimir Putin’s invasion of Ukraine.
King Charles III bank note designs revealed
The Bank of England will today unveil its first bank notes featuring King Charles, which will enter into circulation from the middle of 2024. The new five, 10, 20 and 50 pound polymer bank notes feature a portrait of Charles on the front, as well as a cameo of him in the bank notes' see-through security window, but are otherwise unchanged from their current designs. "This is a significant moment, as The King is only the second monarch to feature on our banknotes," BoE Governor Andrew Bailey said in a statement.