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Daily News Roundup: Tuesday, 21st December 2021

Posted: 21st December 2021

BANKING

Standard Chartered fined £46m over reporting failures

The Bank of England’s Prudential Regulation Authority (PRA) has fined Standard Chartered a record £46.5m for inaccurately reporting its liquidity position, finding that it made five errors between March 2018 to May 2019. The PRA said the mistakes meant the watchdog did not have a reliable overview of the bank’s US dollar liquidity position. Sam Woods, the chief executive of the PRA, said: “Standard Chartered’s systems, controls and oversight fell significantly below the standards we expect of a systemically important bank, and this is reflected in the size of the fine in this case.” The watchdog also said a delay in informing the regulator of one of the issues meant Standard Chartered had “failed to be open and cooperative”. Standard Chartered qualified for a 30% reduction in the fine by agreeing to resolve the matter with the PRA. Without the discount, it would have been fined £66.5m.

Barclays gets Australian banking licence

Barclays has received approval from Australia's prudential regulator to operate as a foreign bank in the country. Barclays, which has secured the foreign authorised deposit-taking institution licence from the Australian Prudential Regulation Authority, re-established its Australia office in 2018 to provide wealth management services, and later invested in a domestic financial advisory firm.

INTERNATIONAL

UBS appeals against money laundering ruling

UBS has filed an appeal against France’s Supreme Court’s decision to uphold the bank’s conviction for money laundering. A Paris appeals court last week cut the bank’s fine for allegedly helping wealthy customers evade taxes to £1.5bn – down from an original penalty of over £3.8bn. However, it upheld an original judgement that the Swiss lender was guilty of soliciting clients illegally and of laundering the proceeds of tax evasion. A seven year investigation by French authorities found that UBS bankers had deployed a range of tactics to illegally procure clients around at corporate events, including using self-erasing hard drives and business cards with no logos.

BNP Paribas to sell Bank of the West to BMO

BNP Paribas, France's biggest bank by market capitalisation, has agreed to sell its US unit Bank of the West to Canada's BMO Financial Group for around $16.3bn. The sale will leave BNP Paribas focused squarely on Europe, while at the same time it will strengthen BMO's foothold in the United States. BNP Paribas said it would use proceeds from the sale to fund more share buybacks, finance bolt-on acquisitions and further develop its presence in Europe.

Varvel exits Credit Suisse

Eric Varvel, a Credit Suisse executive who previously ran the bank’s $500bn asset management unit, is stepping down. Mr Varvel, who was most recently chair of Credit Suisse’s investment bank and head of its US holding company, will be replaced by James Walker, who has been appointed as interim CEO of the US holding company. Those with knowledge of the matter say up to $10m of Mr Varvel’s benefits could be clawed back in the wake of his departure.

JPMorgan develops blockchain payments system for Siemens

JPMorgan has partnered with Siemens to develop a blockchain-based payments system for the industrial group. The firm will use the blockchain based payments system built by JPMorgan’s blockchain unit, Onyx, to manage payments between its own accounts.

FINANCIAL SERVICES

FCA fines hit a six-year high

The total value of fines handed out by the Financial Conduct Authority (FCA) has increased nearly four-fold, hitting £577m in 2020/21. This is up from £156m last year and £423m in 2018/19. The surge was led by action against high street banks, with NatWest last week fined £265m having admitted it had failed to prevent money laundering and HSBC hit with a £63.9m penalty for failings in its anti-money laundering processes just a few days later. Earlier in the year, there was a £150m fine for Credit Suisse over failures in its anti-bribery controls and a £90m fine for Lloyds for treating consumers unfairly in regard to insurance renewals. According to analysis by law firm RPC, FCA fines have this year hit their highest value in six years. The number of fines also increased in the past year, jumping by 57% from seven to 11. Jonathan Cary, partner at RPC, said the data on fines “does not capture the complete picture of the FCA's enforcement activity”, noting that it has “a range of other tools it is increasingly prepared to use” such as withdrawals of authorisation and variations of permission to prevent businesses carrying out certain activities. “Having permissions withdrawn or varied can be even more serious for a regulated firm,” he adds.

M&A activity smashes records in 2021

Global M&A activity hit record-breaking levels in 2021, with the value of deals exceeding $5trn for the first time. Deal volume was up 63% to $5.63trn, soaring beyond the record of $4.42trn recorded in 2007. Chris Roop who co-heads North America M&A at JPMorgan, said: “Corporate balance sheets are incredibly healthy … and access to capital remains widely-available at historically low costs,” while Tom Miles, co-head of Americas M&A at Morgan Stanley, said: “Strong equity markets are a key driver of M&A. When stock prices are high, that usually corresponds with a positive economic outlook and high CEO confidence.”

London leads European listings

Research shows that London was Europe’s listing hotspot last year, beating Stockholm and Amsterdam to take the top spot. Over the course of 2021, 108 firms came to market in the City. This compares to the 38 recorded last year and the 35 London IPOs launched in 2019. Nearly £14bn was raised from listings in 2021, almost triple the amount raised last year and 140% higher than in 2019. Financial services led float volumes, accounting for over a third of total funds raised. The study shows 53 companies listed on the main market, the highest tally in four years, while on London’s junior AIM market floats rose to 55 in 2021 from just 16 last year.

Watchdog has 50 open investigations into pensions advice

The Financial Conduct Authority (FCA) is carrying out a number of investigations in relation to unsuitable pensions advice, with there currently more than 50 active investigations into potential cases. This marks an increase on recent years, with the City watchdog saying “In the past three years we have completed 24 investigations relating to unsuitable pensions advice, taking either supervisory or enforcement action in approximately half of those cases.”

Pension dashboard project announces commercial partners

The Pensions Dashboards Programme has partnered with three commercial dashboard providers - Aviva, Moneyhub and Bud - and will work with them during its initial testing phase. The test phase will run for six months from December 2021 and see the chosen providers prepare to connect their dashboards to the central digital architecture.

LEISURE & HOSPITALITY

Wetherspoon appoints pub managers to its board

Wetherspoon has appointed four pub managers to its board of directors, with the pub chain appointing two employees to full director status and two as associate directors.

REAL ESTATE

Total value of UK property hits £9.5trn

Analysis by Zoopla shows that the value of British housing stock has hit £9.5trn. The research shows that the average house has now gained around £16,000 in value over the last 12 months, with 5m homes seeing their value increase by more than £35,000. Zoopla’s data also shows that prices were up 7.1% in November, taking the average to £240,900. Zoopla says the surge in prices has been driven by a boom in movers and a shortfall in supply, with demand up 16% year-on-year in November while stock declined 9.5%. Grainne Gilmore, head of research at Zoopla, noted that 2021 has been a record year for the market, with the stamp duty holiday playing a part in delivering the highest number of sales since before the financial crisis, with 1.5m transactions. She added: “After a busy start to 2022, the market will start to move back to pre-pandemic conditions,” but the imbalance between supply and demand “will not fully unwind”. Zoopla expects price growth of 3% next year.

RETAIL

Selfridges takeover deal on the horizon

Central Group, of Thailand, and Austria's Signa Group are reportedly close to confirming the £4bn takeover of Selfridges. It is understood that the sale of the retailer by the Canadian Weston family could be announced as early as this week.

ECONOMY

Sunak urged to invest in a stronger recovery

Carys Roberts, executive director of the Institute for Public Policy Research, says that while economic commentators and investors are focused on inflation and the Bank of England’s decision to raise interest rates to 0.25%, “the biggest macroeconomic questions facing the UK … are all up to the Chancellor." She highlights the challenges the hospitality sector faces as the Omicron coronavirus variant hits trade, and details measures Rishi Sunak could take to stop companies collapsing and restore business confidence. Among these, Ms Roberts says the Chancellor should reinstate a version of the furlough scheme, as well as payments to the self-employed. Saying the UK faces a choice between a smaller, low-productivity economy and investing in a stronger recovery, with good jobs and support for people to take them, she comments: “An astute politician would take the latter path.”

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