BANKING
City minister flags cut to tax surcharge on UK financial sector
John Glen has vowed to lobby the Chancellor for “competitive tax rates” for the City ahead of the Budget, raising hopes that the 8% surcharge on banking profits could be cut. The cap on bankers’ bonuses would also be kept under review, the City minister added. The MP went on to reveal that he was optimistic about the post-Brexit future of the UK's financial services pointing to a “booming” London following “the best year since 2014 in terms of equity raising and IPOs”. He said: “What I want is an efficient and effective marketplace for financial services in the context of the global marketplace,” adding that he hoped to strike a financial services deal with the US.
Recognise Bank given green light to become UK's newest bank
Recognise Bank is to become the country's newest bank after being granted a banking license. The Prudential Regulation Authority (PRA) has lifted the deposit restrictions on Recognise, allowing it to launch its personal and business savings products and to start taking deposits. Parent company City of London Group (COLG) said it wanted to address the funding and service gap experienced by underserved small and medium enterprises in the UK.
JPMorgan unveils UK digital bank account
JPMorgan’s new digital current account launches in Britain today under its Chase brand. Analysts said the arrival of the Chase account would provide a shot in the arm to the stagnant current account market.
PRIVATE EQUITY
Venture funding soared in first half
Figures show venture capital investment rose to £13.5bn for the first six months of the year, more than was raised across the whole of 2020. A report by Tech Nation and Dealroom found 1,700 start-ups benefited from venture capital investment in the first half. Total investment outstripped France and Germany combined. Fintech investment accounted for £4.2bn of the funding over the period and fintech firms made up 11 of the 20 companies that achieved $1bn valuations in the first half of 2021.
Charlie Mullins sells Pimlico Plumbers
Pimlico Plumbers has been sold to KKR-owned home services company Neighborly for between £125m and £145m. The sale means a £130m payday for founder Charlie Mullins who started the business in 1979 and holds a 90% stake. His son, Scott, who will remain CEO, retains the remaining 10% stake in the firm.
AnaCap splits off analytics unit
AnaCap Financial Partners is spinning off its analytics unit Equipped AI into a separate business. The unit provides data analysis for debt, equity and real estate investments.
INTERNATIONAL
BIS warns of green asset bubble risk
The Bank for International Settlements has warned of the growing risk of a price bubble in environmentally friendly-focused asset markets. ESG-focused assets have risen to a value of $35trn and now account for more than a third of all assets professionally managed by banks and investment funds, experts estimate. Exchange-traded funds (ETFs) and mutual funds with ESG or socially responsible investment (SRI) mandates have seen even faster, tenfold growth, to approximately $2trn. Claudio Borio, head of monetary and economic department at the BIS, warned of a "green bubble" risk and also of "definitional risk" and of so-called "greenwashing", where the environmental benefits of certain assets were potentially being over-exaggerated. If those exaggerations are exposed, values could then plunge.
BofA names three bankers to drive financials-focused investment banking
Three executives have been named by Bank of America to head its global financial institutions investment banking business. Will Addas and Gary Howe were most recently co-heads of Americas financial institutions investment banking, while Giorgio Cocini was co-head of financial institutions investment banking for EMEA. All three will report to Thomas Sheehan, head of global investment banking.
AVIATION
US travel ban lifted for fully vaccinated UK and EU passengers
Aviation stocks rose yesterday on news that fully vaccinated UK and EU passengers will be able to travel to the US from November. Shares in British Airways owner IAG were up by 11%, while Air France, KLM and Lufthansa are all up by around 6%. Sean Doyle, chief executive of BA, described the move as “an historic moment and one which will provide a huge boost to Global Britain as it emerges from this pandemic”.
CONSTRUCTION
Developers who hoard land face cladding tax
Developers who sit on land could be forced to pay a new tax to help fund the removal of unsafe cladding. Rishi Sunak is to announce a levy on housebuilders with profits over £25m in his autumn budget. The tax is expected to raise at least £2bn over the next ten years to pay for the removal of combustible cladding from high-rise buildings. The total estimated cost of fixing the crisis could total £15bn.
FINANCIAL SERVICES
City firms seek to poach Scots financial services staff
London-based financial services firms are increasingly looking to attract Scottish staff with the lure of remote working and City salaries, according to Edinburgh-based recruiter Core Asset Consulting, which added that changes to working patterns during the pandemic were now having a “profound impact” on the jobs market with employers from outside Scotland able to recruit staff who can work from home. “The majority of employers understand they will be adopting hybrid or remote working for the remainder of the year", said Core Asset director of financial and profession services Louise Powrie. "While this is dependent on the business' needs, the general consensus is these working models are here to stay for the foreseeable. This is now having a profound impact on the job market, with businesses in London now looking to attract Scottish talent with the lure of remote working and a London salary".
Allianz to lose top asset management executive amid funds dispute
Jacqueline Hunt, a member of Allianz’s board of management in charge of Allianz Global Investors, Pimco and the group’s US life insurance business, is in talks about an early departure, according to reports.
Hedge fund Element hires former MPC member Gertjan Vlieghe
Former Bank of England policymaker Gertjan Vlieghe is to join U.S. hedge fund Element Capital as its chief economist.
HEALTHCARE
Blackstone to plough £850m into UK biotech firm
Blackstone is set to announce an £850m investment in Cambridge-based life sciences firm BioMed Realty. The cash will finance 800,000 square feet of new, high-quality, purpose-built lab and office space for the company. Blackstone boss Stephen A. Schwarzman said the investment aims to “help cement the UK's place as a global leader in life sciences and technology, including vaccine development.”
Venture capitalists raise more than $100bn to target life sciences
Over $100bn has been raised for investment into life sciences businesses so far this year, up from $96bn last year and $63bn in 2019, The majority of the investment is focussed on the US.
MANUFACTURING
CVC in £750m bid for Stock Spirits
CVC has launched a £750m takeover of vodka maker Stock Spirits after it secured the backing of Western Gate, a major investor in the company. Western Gate is the family office of Portuguese cash and carry tycoon Luis Amaral who stands to make tens of millions from the deal.
REAL ESTATE
Half of borrowers will still be paying mortgages off after 65
More than half of new mortgage borrowers do not expect to pay off their loans before they turn 65, according to a recent study. Research published by UK Finance said longer mortgage terms coupled with the ageing population was driving a trend towards borrowing later in life. Some 52% of new homeowner mortgage lending in 2021 has been for terms that will end beyond the main borrower's 65th birthday, it found. It is the first time the proportion has exceeded 50%, the group said, suggesting that later-life mortgage lending is set to become increasingly significant in coming years. In 2014 about a third of new homeowner mortgage lending went beyond the age of 65. Charles Roe, director of mortgages at UK Finance, said: "There's been growing demand for mortgages from those aged over 55 and this is set to continue as more people live and work for longer.”
ECONOMY
Evergrande fears weigh on global stocks
Concerns are growing that an imminent collapse of China’s second largest property company could spill into the global economy and broader financial system. US, European and UK markets fell on fears of contagion from the company’s collapse. Evergrande is buckling under the weight of $300bn (£275bn) of debt and warned creditors this week that it is likely to default on loan repayments. Louis Tse, managing director at Wealthy Securities, a Hong Kong-based broker, said a shockwave could ripple across China if the business went bust: "Evergrande is just the tip of the iceberg ... it has a chain effect." However, investors are not just concerned with the Evergrande debacle. There is nervousness over meetings at the US Federal Reserve and the Bank of England this week when discussions will take place over rising inflation and a possible tapering of pandemic support.
OTHER
Minister seeks to reassure over gas supplies
Business Secretary Kwasi Kwarteng has said there is "no question of the lights going out" this winter as a result of huge rises in gas prices. The minister does "not expect supply emergencies" and he described warnings about shortages as "alarmist". Mr Kwarteng added the UK benefited from having a "diverse range of gas supply sources" and had "more than sufficient capacity, to meet demand."