BANKING
Banks must do more to tackle cash-based money laundering
The Financial Conduct Authority (FCA) has announced a series of measures to step up the fight against money laundering through the Post Office, saying that while banks have made “good progress,” there is still work to do. Banks have been asked to reduce the deposit limit at the Post Office to below the existing £20,000 limit per transaction. They have also been asked to upskill staff to spot patterns of suspicious activity and improve intelligence sharing. The FCA, which expects banks and the Post Office to keep controls under review, will also test the safeguards put in place. The FCA said it was “vital” that money laundering protections do not “get in the way” of legitimate customers and businesses accessing services. Sheldon Mills, executive director of consumers and competition at the FCA, said: “We have worked in partnership with law enforcement, industry and government to ensure people and businesses can still draw on the vital cash banking services provided by the Post Office, while addressing gaps that criminals could abuse.” The FCA said it has held workshops with the Post Office, banks, Government and the National Economic Crime Centre - the part of the National Crime Agency that deals with abuse of financial services, to tackle money laundering.
INTERNATIONAL
£55bn withdrawn from Credit Suisse before rescue
Credit Suisse saw £55bn withdrawn in the first three months of the year, a bank run that triggered its state-backed rescue by UBS in March. Credit Suisse's flagship wealth management division saw the amount of assets it managed fall by almost 29% year-on-year. The bank saw clients pulling money out after it was caught up in the market turmoil that followed the collapses of Silicon Valley Bank and Signature Bank in the US. Independent banking analyst Frances Coppola noted that Credit Suisse had also seen billions withdrawn in the final three months of 2022, telling the BBC's Today programme: “Then of course this quarter's [withdrawals] came on top of that. And banks don't survive outflows like that, they really don't, however big they are."
UBS hires Barclays executives
UBS has hired three executives from Barclays as it looks to expand its investment banking presence in the US. UBS has hired Marco Valla, Jeff Hinton and Kurt Anthony for its global banking teams in New York. Mr Valla joins UBS as co-head of global banking alongside Javier Oficialdegui, while Mr Hinton and Mr Anthony will also join the global banking team.
Santander moves to hire some of Credit Suisse’s top dealmakers
Sources say Santander is in talks to hire a number of senior Credit Suisse investment bankers in New York, including David Hermer, the global head of equity and debt capital markets.
FINANCIAL SERVICES
FCA calls for tougher pension fund stress tests
The Financial Conduct Authority (FCA) has called on liability driven investment (LDI) funds to urgently introduce new stress tests and improve risk management. In an effort to address issues in the industry, which was plunged into disarray in the wake of the mini-Budget in September, the Bank of England recently set out policy recommendations to bolster LDI buffers. The FCA said stress tests and related contingency plans should consider a range of scenarios, including a change to prices or liquidity for assets, as well as system failures or cyber-attacks. The City watchdog said it had found “significant deficiencies” in the management of multiple risks in LDI funds. Sarah Pritchard, executive director for markets at the FCA, said asset managers “must take the necessary steps” so that their LDI portfolios are resilient to future market volatility. Separate guidance from the Pensions Regulator has stressed the importance of “having the right governance and controls in place to reduce risks” to schemes. Fund managers, it added, must be able to “react to events quickly.”
Bitcoin could hit $100,000, says Standard Chartered
Bitcoin could reach $100,000 by the end of 2024, according to Standard Chartered. The bank’s head of digital assets research, Geoff Kendrick, said the cryptocurrency could be boosted by recent turmoil in the banking sector, a stabilisation of risk assets as the US Federal Reserve ends its rate-hiking cycle, and improved profitability of crypto mining. He said: “While sources of uncertainty remain, we think the pathway to the £100,000 level is becoming clearer.” The digital currency’s value this month rose above $30,000 for the first time since June, with this far short of a peak of almost $69,000 in November 2021. While analysts at Citigroup said in 2020 that they believed it could climb to as much as $318,000 by the end of 2022, Bitcoin closed last year at $16,500.
Morrissey: CBI scandal could deter women from the City
Fund manager Helena Morrissey has warned that the scandal at the Confederation of British Industry (CBI) could deter women from entering the City. With the Prime Minister taking questions from executives at the Business Connect event in London, Baroness Morrissey said: “It’s a bit of the elephant in the room but we’re meeting as horrible allegations swell around the CBI.” Saying that “we need everyone to feel they’ll be respected and included if they join industry,” she added that she is “personally worried that this might put women off joining industry.” Rishi Sunak said the Government was working to support women becoming successful entrepreneurs, going on to cite a review into female entrepreneurship carried out by NatWest chief executive Alison Rose.
GAM delays results a second time as it hunts for buyer
Asset manager GAM has delayed the release of its annual results for a second time amid “advanced discussions” regarding strategic options that could see it secure a buyer.
HEALTHCARE
IK Partners targets £269m Medica deal
Private equity firm IK Partners has tabled a £269m bid for Medica, a radiology business which provides services to NHS departments. The offer represents a 32.5% premium on the firm’s share price on the day before the offer was made. Medica’s board has urged shareholders to back the takeover, saying it would allow investors to realise their shares “at a value that reflects the future growth potential of the business.”
LEISURE & HOSPITALITY
Prezzo to close a third of its restaurants
Restaurant chain Prezzo will shut a third of its restaurants after being hit by rising costs. The decision comes after Prezzo saw utility bills more than double in the past year, while the cost of core ingredients has also soared. It added that "double-digit wage inflation" had also hit its finances. The closure of 46 loss-making sites will put 810 staff at risk of redundancy. The Italian restaurant chain went into administration in 2020 before being bought by private equity firm Cain International.
MANUFACTURING
ThyssenKrupp CEO in surprise resignation
Industrial conglomerate ThyssenKrupp has announced the departure of chief executive Martina Merz, saying she is expected to leave before the end of May without offering a reason for her departure.
REAL ESTATE
Property prices for first-time buyers reach record high
According to Rightmove's house price index, the average price of a home for first-time buyers reached a record high of £224,963 this month, despite slower conditions in the wider housing market. The property portal found that sales volumes for properties typically favoured by first-time buyers were up 4% from March 2019, while homes a step up the ladder remained 4% behind 2019 levels, and top-end properties lagged behind by 3%. New sellers' average asking prices increased by 0.2% to £366,247 in April, a slower pace than the typical 1.2% rise for this time of year. Demand for first-time properties, which typically have one or two bedrooms, was 11% higher than it had been four years ago, according to Rightmove. Demand was driven by rising rents, which made buying compelling for those who can raise a deposit and obtain a mortgage.
RETAIL
Retail profit warnings down 44%
Only five UK retailers issued profit warnings in Q1, marking a 44% fall compared to the opening quarter of 2022, when nine retailers raised concerns about their profits. Despite the year-on-year decline, the report notes that 30% of listed retailers have issued two or more profit warnings since the start of 2022 – far exceeding the 8% total for all sectors. Richard Hunter, head of markets at Interactive Investor, commented: “Survival of the fittest has rarely been more appropriate in a retail sector which has had to battle with the fallout from the pandemic, supply chain issues, pressured consumers and typically fierce competition.” He added: “Only the largest of the retailers and supermarkets are able to minimise passing on increased costs by absorbing some of the inflationary pain, meaning that the next 12 months is likely to see a continuation of smaller retailers needing to admit defeat.”
LVMH becomes Europe’s first $500bn company
Luxury goods firm LVMH has become the first European company to hit a market value of $500bn. LVMH, whose brands include Christian Dior, Tiffany, Givenchy and Louis Vuitton, is now the world's tenth biggest company and the only European business among the top ten firms in the world by market value. Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, believes LVMH is “well insulated to economic shocks” as its customers are less likely to cut spending due to rising living costs. She said: “The ultra-wealthy aren't put off by economic ups and downs, and inflation is unlikely to dent their spending habits.”
ECONOMY
Credit agency restores UK's AA rating
Britain's economy has been handed a vote of confidence, with ratings agency S&P Global upgrading the UK’s credit outlook to ‘stable’ from ‘negative’. This reverses a downgrade issued in the wake of September’s controversial mini-Budget. S&P said: “The Government’s decision to abandon most of the unfunded budgetary measures proposed in September 2022 has bolstered the fiscal outlook.” The ratings agency also reaffirmed its AA rating on UK debt. S&P predicts that the UK’s economic output will shrink by 0.5% this year, before growing by an average of 1.6% a year between 2024 and 2026.
OTHER
FTSE firms see more executive exits
Analysis shows an increase in the number of chief executives leaving the UK’s leading companies. The report shows that 38 FTSE 350 chief executives left their roles in 2022, more than double the 18 that departed in 2021. While 13 FTSE 100 companies saw a change in leadership, CEO exits from FTSE 250 companies increased from 10 to 25. Globally, the number of CEOs that moved on hit a five year high of 175 in 2022, from 133 in 2021.