BANKING
Virgin Money to boost buybacks after forecast-beating profits
Shares in Virgin Money rose by as much as 16% on Monday after the lender reported pre-tax profits up 40% to £595m and announced the buy back of an additional £50m in shares, on top of £75m announced in June. The bank set aside £52m to cover potential bad loans, but said there were limited signs of credit concerns so far. “This is a broadly positive update from Virgin Money UK and should be well-received by the market,” said analysts at Goodbody. The bank also said it is giving most workers a rise of around 10% on average to help them cope with the soaring cost of living, which comes on top of a £1,000 payment in August.
OBR’s mortgage rate predictions ‘implausibly high'
The Office for Budget Responsibility’s prediction that the effective rate on existing mortgages will peak at 5% at the end of 2024 is implausibly high, according to Pantheon Macroeconomics, which said it expected the rate to hit just 3.7% by that time. The difference would save a homeowner with an outstanding £200,000 loan £216 per month in interest. The OBR's forecast also implies that nearly one in five outstanding mortgages will be refinanced every three months. Bank of England data shows that the figure is closer to 7% – or one in 14 loans, Pantheon said.
BoE puts move to Leeds on hold
Plans to relocate hundreds of Bank of England staff to Leeds have been delayed by at least a year as Threadneedle Street scales back its ambition to increase its presence across the UK. The Bank of England announced plans to move staff out of London last April with the creation of a new northern hub in Leeds. But, despite shelving plans to acquire up to 100,000 sq ft of office space and freezing recruitment plans, the Bank insisted that its Leeds ambitions had not been scrapped. “We are revisiting our plan and timetable but our presence in Leeds will continue to expand, and our intention to create a Northern Hub there remains,” a Bank spokesman said.
Santander launches new current account
Santander has unveiled Santander Edge, a new current account and exclusive easy-access linked savings deal, which offers up to £400 cashback and 4% interest on balances up to £4,000. The new bank account is effectively replacing Santander's 1|2|3 Lite current account, which has been removed from sale.
Banks urged to ditch oil and gas deals
A campaign group led by film maker Richard Curtis is urging major UK banks to end their "dangerous relationship" with the fossil fuel industry. Make My Money Matter (MMMM) says around 70% of account holders think the lenders should stop financing new fossil fuel projects to help tackle climate change.
PRIVATE EQUITY
MSIM launches $1bn climate-focused private equity strategy
Morgan Stanley Investment Management has launched a new $1bn private equity strategy to invest in private companies in North America and Europe, whose activities aim to collectively prevent or remove one gigaton of carbon dioxide emissions by 2050, or prevent that amount entering the atmosphere. Investments through the 1GT strategy will focus on the mobility, power, sustainable food and agriculture sectors and circular economy and deliver both financial returns and positive environmental impact, MSIM said.
INTERNATIONAL
Four banks in Poland charged over unauthorised transactions
Poland's consumer watchdog UOKiK has accused Bank Pocztowy, ING Bank Slaski, Nest Bank and Santander Consumer Bank with failing to return money lost through unauthorised transactions quickly enough. The four banks also provided misleading responses to complaints, the UOKiK said. The banks could face fines of up to 10% of annual revenue if found guilty.
Julius Baer set to meet targets despite market fall
Julius Baer is on track to reach its 2022 profitability targets, the Swiss bank said on Monday, even though "challenging market" conditions have shrunk its assets. Assets under management fell by 11% to 429bn Swiss francs ($449.07bn) in the 10 months to the end of October. However, this was mitigated by positive currency exchanges as well as net new money inflows of 3bn francs.
Morgan Stanley’s top international executive to step down
Franck Petitgas, Morgan Stanley’s top international executive, is retiring from the Wall Street bank after a 30-year career.
AVIATION
Virgin Atlantic withdraws support for Heathrow’s third runway plans
Virgin Atlantic has withdrawn its support of a third runway at Heathrow after it proposed increasing its landing charges by 120%. Shai Weiss, the chief executive of the airline, called on the Civil Aviation Authority to reform the “broken” system and “pay closer attention to the abuse of power by a de facto monopolistic airport”.
FINANCIAL SERVICES
FCA issues warning over “game like” trading apps
The Financial Conduct Authority (FCA) has warned that “game like” features in stockbroking apps can make investors act like problem gamblers. Trading apps that send frequent notifications to customers with the latest market news and provide users with in-app points, badges or celebratory messages for making trades have been condemned by the watchdog. Sarah Pritchard, executive director of markets at the FCA, said: “Some product design features could be contributing to problematic, even gambling-like, investor behaviour. We expect all firms that offer stock trading to consumers to review and, where appropriate, make improvements to their products.”
BoE urges tighter crypto regulation after FTX collapse
Sir Jon Cunliffe, the deputy governor of the Bank of England, has said that although crypto markets do not yet have the scale to threaten wider financial stability, further regulation is required before that does become the case. Speaking at Warwick Business School, Sir Jon said crypto exchanges such as the bankrupt FTX created risks to their market by operating services kept separate by mainstream institutions, and by using unbacked crypto assets as collateral for loans and margin payments, as FTX did with its FTT token.
Fintech start-up closes trade finance gap for small businesses
The FT profiles Stenn, a platform which connects small firms to developed capital markets. Its proprietary technology can process applications for trade finance in as little as 48 hours, in more than 70 countries.
LEISURE & HOSPITALITY
UK lottery regulator rebuked over ‘poorly managed’ licence process
A report by a cross-party group of MPs has concluded that the UK’s gambling regulator oversaw a “poorly managed” competition process to decide the next National Lottery operator.
MANUFACTURING
Newport chip plant workers fear for jobs after takeover blocked
Workers at Newport Wafer Fab have accused the Business Secretary of putting 600 jobs at risk by blocking a Chinese-backed takeover of the factory. Dutch chipmaker Nexperia, which is controlled by China’s Wingtech, will be forced to unwind its £63m takeover of the Welsh semiconductor plant on national security grounds following a long-delayed final ruling from Grant Shapps. Mr Shapps has so far refused to provide details on the substance of the national security concerns. Staff at the Newport plant called the takeover ban a “deeply political decision” and a “betrayal of our team”. They added: “No international company in its right mind would ever invest in the UK after this.”
MEDIA & ENTERTAINMENT
Disney board ousts Bob Chapek
Shares in Walt Disney rose sharply on Monday after Bob Iger returned as chief executive less than a year after he retired. Bob Chapek faced a rebellion from senior executives in recent weeks, the FT reports, with some of his top team reportedly having lost confidence after nearly three years of turmoil. “The board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the company through this pivotal period,” the chairwoman, Susan Arnold, said in the statement. The Telegraph’s Matthew Lynn draws parallels between Disney’s Chapek and Unilever’s outgoing chief Alan Jope, both of whom, Lynn contends, have failed due to their hubristic support for left-liberal causes.
Penguin Random House’s $2.2bn deal for Simon & Schuster collapses
The planned $2.2bn acquisition of Simon & Schuster by Bertelsmann-owned Penguin Random House has collapsed over antitrust concerns. A US federal judge blocked the tie-up earlier this month on the grounds it would lessen competition in the market for acquiring publishing rights. Bertelsmann initially said it would appeal against the ruling but, under its agreement with Paramount, only a week remained for the deal to be completed. Paramount decided to halt the process, and determined that Bertelsmann was “obligated to pay a $200m termination fee.”
RETAIL
Retail footfall expected to rise on Black Friday
New analysis suggests that retail footfall is expected to increase 12.8% on 25 November this year, also known as Black Friday, as shoppers capitalise on discounts amid inflationary pressure and fears around Christmas supply shortages. Experts say that UK shopping centres are likely to see a 16.3% increase in footfall compared to last year, while high streets are expected to see a 13.2% rise. However, footfall will still be 7.8% lower than Black Friday 2019, before the coronavirus pandemic.
ECONOMY
Output drops to its lowest since first Covid lockdown
Analysis by Lloyds Bank reveals twelve of the fourteen key sectors of the economy experienced a drop in output in October. This is up from nine in September and the highest number to report contraction since May 2020. Rising inflation was behind the decline, forcing businesses and consumers to cut back on spending, PMI data scrutinised by the bank showed. Jeavon Lolay, head of economics and market insight at Lloyds Bank commercial banking, commented: “With both our domestic challenges and global headwinds unlikely to materially recede in the short term, the key question revolves around how long this downturn may last.” However, there are parts of the economy that continue to perform well. Providers of software services are reporting a rise in new orders while food and drink had the slowest fall in demand of any manufacturing sector.