Lenders expect demand for mortgages to weaken
The Bank of England’s quarterly survey shows lenders expect demand for mortgages to fall over the next three months amid continuing Brexit uncertainty. A net balance of 18.9% of respondents said that demand from homebuyers was likely to fall between April and June. This is the largest figure since the fourth quarter of 2010, when almost a third of lenders were preparing for a slowdown. Meanwhile, research by Moneyfacts shows a boom in low-deposit mortgages. Homebuyers who only have a 5% deposit now have a choice of 405 different mortgages, whereas a decade ago just three deals were available. Separately, specialist lender Kensington Mortgages has warned that a quarter of a million homeowners on riskier interest-only mortgages will face a refinancing crunch in five years’ time. Nearly 860,000 interest-only deals will have come to the end of their mortgage term by the beginning of 2029 and about half of those borrowers will not have arranged a new loan, Kensington said.
Advisers split over Bramson’s Barclays battle
Shareholder advisory group ISS has called on Barclays shareholders to vote against Ed Bramson’s bid for a seat on the bank’s board. However, fellow adviser Pirc has said that the activist investor’s campaign has merit, and it is staying neutral on the matter. Meanwhile, Jupiter Asset Management is understood to be backing Bramson’s campaign. Separately, the FT reports that Barclays is planning to cut bonuses as part of a cost-cutting drive to boost returns at the underperforming investment division.
NatWest bolsters SME loan pot
NatWest is doubling its growth funding programme for SMEs, citing the need to help them navigate Brexit disruption. The growth funding loan pot will be immediately increased to £6bn and will help businesses looking to grow, fund green initiatives and navigate the current uncertain business climate, NatWest said.
Monzo plans ‘Hargreaves Lansdown for millennials’
Monzo is in discussions with BlackRock, Fidelity and Vanguard about offering cheap investment accounts in a plan dubbed “Hargreaves Lansdown for millennials”. The digital bank wants to launch investment accounts on its app later this year so that customers can buy low-cost funds rather than picking individual stocks.
Bank bosses facing shareholder unrest
Metro Bank founder Vernon Hill faces a shareholder revolt next month. One of the lender's backers has told the Sunday Telegraph that Mr Hill or chief executive Craig Donaldson must go as a result of the accounting blunder earlier this year which wiped £800m off the bank's stock market valuation in one day. Elsewhere, Royal Bank of Scotland chief executive Ross McEwan is facing an investor rebellion this week over his annual pension contributions, which are equal to 35% of his annual salary.
Unbanked 'spend £500 extra a year' on bills and services
People who do not have access to a bank account pay an extra £485 a year for everyday bills and services, research from Pockit suggests. The challenger bank found more than 1.2m Britons do not have a bank account, so miss out on discounts reserved for those who bank online. This ramps up the cost of energy bills, mobile phone deals and loans, it said.
Credit card defaults jump
Figures from the Bank of England show the number of people defaulting on their credit card debts rose sharply in the first three months of the year. The Bank’s survey of major lenders found the default rate had increased to 22.9% in the first quarter from 12.7% in the last quarter of 2018.
Terra Firma chief departs
Andrew Géczy has departed his role as chief executive of Terra Firma with immediate effect. The departure is understood to follow disagreements between Mr Géczy and Terra Firma founder Guy Hands.
The rise of ‘super carry’ unsettles private equity investors
Private equity groups including Carlyle Group, Vista Equity Partners and Bain Capital are raising the performance fees they charge investors from 20 to 30% on some funds.
Blackstone to shift from partnership to a corporation
Blackstone has announced it is converting to a corporation, after concluding that tax cuts meant it partnership structure was no longer worth maintaining.
European investment banks in ‘twilight zone’
The head of the Association for Financial Markets in Europe (AFME) has warned that the continent’s investment banks are stuck in “a twilight zone” as Britain prepares to leave the EU with no clear picture of what its future relationship will be. Simon Lewis, chief executive of the lobby group, added that investment banks have dramatically stepped up preparations for a no-deal Brexit in recent weeks. The Sunday Telegraph notes that hundreds of JP Morgan bankers have been told they do not need to sign new EU contracts for the time being after the delay of Brexit until October. Meanwhile, the FT says that European banks are likely to report a third consecutive quarter of poor investment banking revenues, intensifying calls for another round of job cuts and retrenchment.
Standard Chartered planning $1bn buyback
Standard Chartered is preparing to pay out more than $1bn to shareholders through its first share buyback programme in nearly two decades, after paying $1.1bn (£850m) to authorities in the US and Britain to settle charges of violating sanctions against Iran.
JPMorgan to widen use of blockchain system
JPMorgan Chase is to widen the use of the Interbank Information Network, which enables banks to share information on a mutually accessible ledger. Seventy-five global banks joined the venture last year. Meanwhile, JP Morgan Chase CFO Marianne Lake has been tipped as the next chief executive of the bank, after taking over the running of its card services, mortgages and car finance business.
Amex beats forecasts
American Express has beaten quarterly profit forecasts after spending more on its rewards programme to boost customer spending. Profit was flat over the three months as total expenses rose 11% to $7.6bn and card rewards cost $2.5bn, up 4% from the same period a year ago.
Nomura boss says bank has ‘no choice’ but to change
Nomura chief executive Koji Nagai is planning to significantly restructure the bank’s management after it recorded a $907m net loss between April and December last year.
Uber's self-driving car unit valued at $7.3bn
Uber’s self-driving car unit has been valued at $7.3bn (£5.6bn) after raising $1bn (£769m) in funding from a consortium including Toyota and Saudi Arabia’s sovereign wealth fund.
Edinburgh Airport could sell for £2bn
Edinburgh airport is expected to be sold this year for as much as £2bn, as its owner Global Infrastructure Partners bids to cash in on soaring valuations for aviation infrastructure.
FCA reveals complaints figures
The Financial Conduct Authority has published figures showing the number of complaints against regulated financial firms in the second half of 2018, revealing a 5% fall in complaints to 3.91m. PPI was the most complained about product, making up 40% of all complaints – an 8% dip when compared to H1 2018. Current accounts, the second most complained about product, saw complaints decrease by 13% over the half-year, while credit cards, the third most complained about product, saw an increase of 10%. The proportion of complaints closed by firms within three days rose to 37% compared to 35% in the first six months of last year, with the proportion closed within eight weeks rising from 92% to 95%.
FCA concerned by rise in guarantor loans
The Financial Conduct Authority has reiterated its concerns about sub-prime credit companies that issue high-interest loans guaranteed by the family or friends of the borrowers. FCA chief executive Andrew Bailey told the Times that a rise in the number of guarantors making at least one repayment on behalf of a borrower raised questions about lenders’ affordability checks. The FCA estimates that guarantor loan balances have more than doubled since 2016 to almost £1bn.
Provident could turn predator
Speculation is growing that Non-Standard Finance, which has been pursuing a £1.1bn hostile bid for rival sub-prime lender Provident Financial, could become a takeover target itself. Analysts at Goodbody said there was a “reasonable prospect” that Provident could turn predator and make an offer for NSF, which has been trying to buy it since February.
Hedge funds bounce back
Hedge funds have recorded their strongest Q1 in 13 years, but money is still being pulled out of the industry by investors following a torrid 2018. Hedge Fund Research’s composite index, tracking a range of hedge funds, jumped almost 6% in the first three months of the year, the strongest first quarter gain since 2006.
Standard Life Assurance's Ireland move draws ire
Standard Life Assurance has received 355 objections from policyholders to its decision to move £18bn of business to Ireland ahead of Brexit – with the vast majority angry about losing access to the UK's regulatory protection offered by the Financial Services Compensation Scheme.
Khazanah shuts London HQ
Malaysian sovereign wealth fund Khazanah has shut down its London office to focus on investments in Asia.
LEISURE AND HOSPITALITY
Suitors circle Thomas Cook
Tour operator Thomas Cook has been approached by a string of suitors in recent weeks after its stock market value plunged. Private equity firms KKR and EQT are among those reportedly considering offers for either Thomas Cook’s main tour operator unit or the whole business. Chinese conglomerate Fosun has also been tipped to take over, having raised its stake in Thomas Cook since the start of the year.
Seventy-six pubs 'shutting per month'
Nearly 1,000 UK pubs shut last year, although the rate of closures is slowing, according to new research. About 76 pubs a month "vanished" from the communities they served in 2018, property firm Altus Group found.
Robots predicted to displace, not replace, workers
New research by Make UK, which represents the manufacturing sector, suggests artificial intelligence will eliminate low-skilled roles in a third of manufacturing businesses over the next five years. But it also found that although companies expect technological advances to make jobs redundant, the majority of businesses want to retain displaced staff.
MEDIA AND ENTERTAINMENT
Pinterest float makes waves
Shares in Pinterest rose by as much as 30% last week as it went public in New York. The image-sharing app raised $1.4bn (£1.1bn) in one of the most highly-anticipated flotations of the year, valuing it at $12.7bn.
Deficit undershoots expectations
Figures due out this week are set to show the budget deficit in the fiscal year was below expectations. Public borrowing for 2018-19 is set to come in at just over £22bn, below the £25.5bn predicted by the Office for Budget Responsibility (OBR) last autumn, and £15bn lower than forecast in March last year.