BANKING
Nearly half of bank branches have closed since 2015
Research by consumer watchdog Which? reveals that 4,685 bank branches have closed over the last seven years with a further 226 set to disappear by the end of year - accounting for almost half of the country's network. According to the study, the elderly and those in rural areas who most relied on cash were also the most likely to be affected by bank and ATM closures. Seven parliamentary constituencies have been left with no banks at all. Jenny Ross, Which? Money editor, said: “While many consumers have embraced digital banking, there are still millions, including the elderly, vulnerable and isolated, who aren't yet ready or willing to make that switch - and they must be protected.” She adds: “Though banking industry proposals for action are welcome, what's needed most is the legislation promised by the Government to protect cash. This should also include making the Financial Conduct Authority the key regulator to protect cash services.”
UK bank results predicted
The Times looks ahead to this week’s first-quarter results, with HSBC today expected to announce a 36% fall in pre-tax profit to $3.7bn, while on Wednesday Lloyds Banking Group is set to report a 25% slide to £1.4bn. Barclays and Standard Chartered follow on Thursday, with the former forecast to announce a 45% drop to £1.3bn and the latter a 27% fall to $1bn. On Friday NatWest is expected to say that its pre-tax operating profits slid by 20% to £755m.
Savings rates edge up
Six providers have increased their one-year fixed rate savings deals to 2% or more bringing returns to their highest level in three years. Al-Rayan Bank leads the way with a 2.11% rate for its one-year account followed by Kent Reliance and Charter Savings Bank, both owned by One Savings Bank, offering 2.05%. Rates are likely continue moving upwards - driven by competition between challenger banks and further base rate rises, experts say.
PRIVATE EQUITY
CVC and KKR mull bids for Toshiba
CVC and KKR are considering bids for Japanese conglomerate Toshiba as bosses explore a sale following a protracted battle with shareholders over the future of the group. Toshiba has a market cap of $18bn and a buyout of the group could be the biggest ever deal in Japan.
INTERNATIONAL
BBVA ups offer for Garanti
BBVA said on Monday it had raised its bid for the rest of Turkish bank Garanti, taking advantage of the fact that the lira has depreciated by more than 28% since November. Like bigger Spanish rival Santander, BBVA has been expanding in emerging economies where it sees greater growth opportunities than in mature markets. However, analysts see macroeconomic risks from betting on emerging markets. "Investor views on BBVA increasing its exposure in Turkey at the current juncture remains negative, with this announcement unlikely to help the stock from that perspective," UBS said.
Mizuho to bulk up US M&A advisory, equity underwriting
Mizuho Financial Group plans to bolster its M&A advisory and equity underwriting operations in the US, CEO Masahiro Kihara has said. The move to grab a bigger share of the world's largest investment banking fee pool comes as Mizuho shrugs off concerns about its exposure to SoftBank Group, whose finances have come under pressure as its stock price and portfolio valuations plummet. "We are not worried at all," Kihara said, citing “mutual trust” between the parties.
China cuts FX reserve ratio to support yuan
The People's Bank of China said on Monday it would cut the amount of foreign exchange banks must hold as reserves by 100 basis points to 8% beginning May 15th in a move aimed at slowing the depreciation of the yuan.
FINANCIAL SERVICES
London proves most popular choice for foreign investors
Figures published by the City of London Corporation show London remains the world’s most popular destination for foreign investment in financial and professional services companies. Last year, 114 investments totalling nearly £600m were made in firms from those sectors based in the capital, with fintech firms accounting for a third of the investment. Almost a fifth went to technology companies that support financial services businesses. “Despite the challenges of the pandemic, the UK’s financial and professional services sector has proven resilient,” Vincent Keaveny, Lord Mayor of London, said. “The UK’s offer to global investors continues to go from strength to strength due to its unique combination of time zone, language, legal system, global talent and financial services ecosystem.”
FCA invokes emergency powers to address steelworker pension scandal
The Financial Conduct Authority (FCA) will from Wednesday use emergency powers to prevent financial advisers from disposing of their assets to avoid paying compensation to former British Steel Pension Scheme members. Offloading assets to avoid paying compensation would leave the redress bill, which the FCA estimates will be £71m, to be picked up by the industry lifeboat fund. Thousands of British Steel workers were wrongly advised to transfer out of their lucrative final salary pensions into often high-risk schemes that resulted in huge losses. Sheldon Mills, the FCA’s executive director of consumers and competition, said: “Firms who gave poor advice to British steelworkers must ensure that they retain assets and funds to pay redress under our proposed scheme.” Mills added: “We will act swiftly if the rules aren’t being followed.”
Study finds retail investors prioritise profits over ESG concerns
Two-thirds of retail investors are indifferent to whether their money goes into ethical investments, according to research by brokerage Charles Schwab. Only 44% said they consider ESG (environmental, sustainability and governance) factors when making new investments, with the proportion falling to 28% among older investors. Among young investors, 55% of millennials and 56% of Gen Z say they regularly thought about the ESG factors of where their money was going. Richard Flynn, Charles Schwab's UK managing director, said: "Despite being a major focus for asset management firms, our research shows ESG is not always a priority for retail investors. Investors often want to invest in companies that help to improve the environment, such as renewable energy producers. However, there is a reluctance to sacrifice investment performance or pay higher fees in return."
ECB executive calls for clampdown on ‘lawless frenzy’ of crypto trading
Fabio Panetta, an official overseeing the ECB’s work on a digital euro, has labelled cryptocurrencies a “Ponzi scheme” and called for a regulatory clampdown to avoid a “lawless frenzy of risk-taking”.
DWS whistleblower: ‘ESG today is meaningless’
Desiree Fixler, who blew the whistle on bogus ESG claims made by Deutsche Bank’s asset management arm DWS, says many general funds are dressing straightforward investments up as “climate action”.
HEALTHCARE
UK life sciences ride pandemic momentum
City AM reports on the wave of cash flooding into UK life sciences firms in light of the £225m recently raised by Cambridge Innovation Centre for its second life sciences fund.
MANUFACTURING
EU plans ‘largest ever ban’ on dangerous chemicals
The EU looks set to introduce a slew of new restrictions on harmful chemicals with industry groups saying up to 12,000 substances could fall within the scope of the proposed restrictions. The controls planned by the European Chemicals Agency have shocked petrochemical lobbyists, according to Tatiana Santos, policy manager at the European Environmental Bureau, who adds the restrictions would “improve the safety of almost all manufactured products and rapidly lower the chemical intensity of our schools, homes and workplaces.” The plan focuses on entire classes of chemical substances for the first time, a move designed to prevent chemicals companies from using a tactic known as “regrettable substitution” where dangerous banned substances are replaced with similarly harmful ones not yet on the regulatory radar.
Treasury set to double support for UK sectors hit by energy crisis
The Government is set to extend a support scheme for energy-intensive industries for a further three years with the level of support doubling from about £130m a year up to £280m a year.
MEDIA & ENTERTAINMENT
Twitter accepts Elon Musk’s $44bn takeover offer
Elon Musk is to buy Twitter in a $44bn (£34.6bn) deal after the social media platform’s board recommended the offer to shareholders. The business will now be taken private. Bret Taylor, Twitter's independent board chair, said: "The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter's stockholders." Commenting on the agreement, free speech advocate Mr Musk said: "Twitter has tremendous potential - I look forward to working with the company and the community of users to unlock it." He said he planned to introduce new features, make its algorithms open source, stamp out bots and authenticate all human users. Shareholders will now need to vote on the deal and regulatory approval secured thereafter.
TalkTV launches amid concern over advertisers
News UK’s new television channel TalkTV launched on Monday evening, following the success of GB News in disrupting the industry. But experts say Rupert Murdoch’s new venture could take time to turn a profit as advertisers may not be willing to take a risk with another opinionated news network. Tom Standen-Jewell of Enders Analysis said: "Increasing competition in opinionated news and discussion formats, as well as the harsh economic reality of producing TV news means TalkTV is unlikely to be profitable in the mid-term.”
REAL ESTATE
Average house price hits record high for third month
The average price of a house has climbed to a new high for the third month in a row, pushing it over £360,000. In the last three months the average figure has surged by £19,082, according to Rightmove. It said the price had jumped by £5,537 in the past month alone, taking the average asking price in April to £360,101. The average cost of a home in London stands at £667,110, up 6.6% from the same period last year. In southeast England, the average property is £479,500 and £418,361 in the east. The cheapest region is northeast England, where the average cost of a home is £180,088, an 11.2% increase since last year.
RETAIL
Shoppers urge retailers to ramp up investment in technology
Shoppers are demanding an evolution of payments systems to avoid queues and lengthy online checkout forms, according to a report into retail behaviour by fintech firm Klarna. “UK shoppers are tech savvy, and their online shopping preference currently ranks ahead of all the other countries in our report,” said Viveka Söderbäck, Consumer Trend Expert at Klarna. “Brits crave digitalisation and expect retailers to invest in new technology that gives them a better shopping experience, especially when it comes to faster checkouts and frictionless payments”.
ECONOMY
Rate-setter calls for modernisation of economic institutions
Jonathan Haskel, an external member of the Bank of England’s monetary policy committee, has warned that institutional reform is required to prevent permanent low growth and poor productivity. Haskel argues that the trend towards intangible assets in the digital economy, away from a typical tangible economy, requires new institutions and updated competition policy otherwise the intangible economy is going to stall. He explains that when a firm with intangible assets wants to borrow money “the banking system doesn’t work so well,” adding: “There is a mismatch of institutions.” Haskel warns that the economy’s long-standing structural features, such as low investment and sluggish productivity, will worsen without a revamp. “We want new companies to spring up with new ideas and that are greener,” he said. “If they can’t get the funding or competition policy is set up in a way that hampers them or planning policy is not right, we are not going to make the transition to a high-growth economy”.
Markets tumble over Beijing lockdown fears
Fears of a new Chinese lockdown sparked a sell-off on global markets on Monday, with sharp drops in European and Asian markets. Mainland China’s CSI 300 saw its sharpest decline since February 2020, falling 5%. Panic-buying gripped Beijing on Sunday and Monday as residents braced for restrictions similar to those suffered by people living in Shanghai. Further lockdowns will hamper demand in a country experts say in already in a recession. Craig Botham, of Pantheon Macroeconomics, said the shock from China is “an inflation hit waiting to happen” for the West. It will be felt across global supply chains “as there is nothing that China doesn’t touch in terms of production. It is going to be everything.”