HSBC’s pre-tax Q3 profit jumps to more than $5bn
HSBC has posted a 74% rise in pre-tax profit to $5.4bn for the three months to September, up from $3.1bn a year earlier and beating expectations for $3.8bn. The bank told investors on Monday that business was boosted by wealthy clients in Asia and continued volatility in the Hong Kong and Shanghai stock exchanges. A $2bn buyback announced by the bank builds on an interim dividend announced in August of 7 cents per share, worth about $1.4bn. Chief executive Noel Quinn said: "Our strategy remains on track, with good delivery in all areas, reflected in more consistent top-line growth, robust lending pipelines across our businesses and rising trade and mortgage balances. While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us."
Capital rules holding banks back
Medium-sized banks are being hit particularly hard by rules forcing them to hold far more capital than their peers in Europe or the US, bankers told MPs yesterday. The bankers said this should change as part of the UK’s post-Brexit plans to make the City more competitive. Nigel Terrington, chief executive of Paragon Bank, and a leader of a group of lenders campaigning for change to the capital rules, said there was a “huge barrier to growth” in the UK from the regime known as MREL, which requires banks with a balance sheet of between £15bn and £25bn hold special debt designed to absorb losses in a crisis.
Co-op Bank plans to pursue TSB
The Co-op Bank on Monday confirmed it approached Spanish lender Banco de Sabadell over buying TSB. Although Sabadell rebuffed the offer, insiders said that Co-op's board is determined to pursue a deal and feel "optimistic that there will be discussions" over the coming weeks. The Evening Standard’s Oscar Williams-Grut says “an eventual sale seems inevitable” despite TSB being a useful source of profit in recent quarters. The FT says the fact that Co-op is reaching for TSB eight years after its failed acquisition of the lender shows how sluggish bank M&A is in the UK.
Government urged to offer discounted green loans to SMEs
A group of fintech’s led by finance marketplace Funding Options and lender Swishfund has called on the Government to offer discounted green loans to SMEs as they grapple with the net zero transition. The group proposed a £1bn ‘ESG Lending Pool’, which would be run by state-owned British Business Bank and match-funded by private capital. This would be used by lenders to make loans to ESG-focussed business or for ESG-related purposes. The suggestion follows a report by the British Business Bank that smaller businesses are responsible for around half of the UK’s business-produced emissions.
Treasury puts aside £150m for Scottish SMEs
Scottish SMEs will have access to a £150m ring-fenced fund to help them grow. The fund will be provided through the British Business Bank, a move that could lead to accusations that the UK government is encroaching into devolved areas. Rishi Sunak, the Chancellor, said: “This fund will help thousands of small businesses in Scotland to make ideas a reality and grow their companies. I’m always impressed by the innovation and determination of [small and medium enterprises] and the UK Government will continue to support businesses across the UK.”
Servicing debt hampers SME investment
A report from Lloyds Bank reveals that many SMEs hold back on investment because of debt repayments. The bank said that although most businesses can afford to service their debt, it still hampers their growth. The good news is, however, that despite a big increase in the amount of borrowing by businesses since the start of the pandemic, only 11% of SMEs indicated they are worried about their current level of business debt, the bank found.
NatWest and HSBC online banking down
Both HSBC and NatWest suffered technical problems on Monday leaving UK customer unable to access their accounts online.
BlackRock partners with Saudi infrastructure fund
US asset manager BlackRock is partnering with Saudi Arabia’s National Development Fund to operate an infrastructure fund with an investment target of $53bn in the kingdom over the next decade.
Three Qatari banks placed on negative watch
Fitch Ratings on Monday issued a warning over three banks in Qatar. The ratings agency placed Doha Bank, Al Khalij Commercial Bank and Qatar Islamic Bank on "ratings watch negative", citing concerns over the sector's increasing reliance on external funding and a recent rapid growth in assets.
Banks warn travel quarantine threatens Hong Kong’s international status
The Hong Kong government has been warned that the territory’s status as an international financial centre is at risk because of “highly restrictive” coronavirus policies that stifle foreign travel.
Lenders say Americans are ready to use their credit cards again
US credit card lenders are confident of an increase in borrowing as consumers run low on savings built up over the course of the pandemic; payments rates are expected to continue to decline.
UBS sells Spanish wealth management business
UBS has agreed to sell Gestion, its wealth management business in Spain, to Madrid-based Singular Bank. German media thought UBS was paid $291m for the unit.
Hertz order pushes Tesla through $1tn valuation barrier
After Tesla received an order for 100,000 of its vehicles from the rental company Hertz, the US electric car maker’s ’s stock market value broke through the $1tn mark for the first time. Tesla last week recorded record quarterly sales as well as record profits of $1.6bn.
New FCA chairman must not be another insider
Over 200 campaigners have written to the Chancellor calling for the next chairman of the Financial Conduct Authority to be someone who can win the confidence of “stakeholders beyond the Square Mile”. The call follows news that the outgoing chairman Charles Randell would step down next spring, a year earlier than expected. In a letter to Rishi Sunak, signatories said that the appointment must be used to “introduce some much-needed diversity of thinking to the FCA’s leadership team” and claimed that Randell did not do enough to “remedy long-standing and widely acknowledged deficiencies in the regulator”.
Investors must play a leading role in green revolution
Writing in the Times, Ralph Hamers, group chief executive at UBS, says only collective action can achieve the required investment to transition to a lower-carbon economy by 2030. He lays out some ideas to help investors “play a larger role in financing the innovation that will be key to a smoother energy transition,” including fostering “alignment towards a global framework for sustainability reporting that encourages innovation”, demanding the standardisation of climate disclosures and marshalling more capital for transition in emerging markets.
FCA should block LV sale to Bain
The Mail’s Alex Brummer asserts that the Financial Conduct Authority should prevent the sale of insurer and pensions mutual LV to private equity outfit Bain Capital, arguing that the regulator cannot afford another scandal. “The FCA was not shy in intervening to help block the unsafe merger of Non-Standard Finance and Provident Financial, fearing danger for some of the least well off borrowers in Britain,” Brummer says. “It should show the same iron will in keeping Bain Capital at arms' length.”
LEISURE & HOSPITALITY
Report finds vaccine passports could cost venues millions
An impact assessment drawn up by the Government warns that vaccine passports could fuel the spread of COVID-19 by encouraging people to go to poorly ventilated pubs instead of large venues. The document, written by the Department of Digital, Culture, Media and Sport, also says venues would have to find thousands of extra stewards while affected venues could see a drop in revenue of between £345m and £2.067bn if COVID-19 certification came in. Meanwhile, hospitality bosses in Scotland are calling on Nicola Sturgeon to scrap her Covid vaccine passport scheme after a weekend of chaos which saw hundreds of revellers refused entry and “intolerable levels of abuse” directed at staff.
First deal for new UK Infrastructure Bank
The UK’s new Infrastructure Bank has announced its first deal – a £107m investment in the South Bank Quay development at Teesworks, a green energy and freeport hub in Teesside, North-East England, creating around 800 jobs. The loan should transform part of the former Redcar Steelworks site along the River Tees, creating a 450-metre quay to service the offshore wind sector, providing opportunities for manufacturing, storage and mobilisation of wind technology, the company said in a statement.
MEDIA & ENTERTAINMENT
Whistleblower calls for regulation to reduce Facebook’s harm
Facebook whistleblower Frances Haugen told MPs during a parliamentary hearing yesterday that the company’s internal culture prioritised profitability over its impact on the wider world. She said Facebook was a polarising force and was responsible for radicalisation while its Instagram unit is a danger to children and may never be safe for pre-teens.
Retail footfall falls
New figures reveal footfall across all retail destinations decreased by 1.5% last week, with high streets the worst hit, falling 3.6%. Overall, footfall was 27.9% higher when compared with the same week in 2020, but 15.3% down against 2019.
Derby could be saved by rich US investor
Derby County has received a £50m bid from American businessman Chris Kirchner, who reportedly wants talks with the EFL about appealing the club's points penalties.
Tenreyro: Wait for data on furlough before raising rates
Bank of England rate-setter Silvana Tenreyro has said that policymakers should wait to judge the impact of the end of the furlough scheme before raising interest rates. “Uncertainty over the effects of the furlough scheme should be resolved over the coming months, which should help paint a clearer picture of the position of the labour market,” Tenreyro said in a speech to the Centre for Economic Policy Research. Tenreyro went on to argue that many of the inflationary pressures in the economy would fade over time, but a key uncertainty remained: the speed of the rotation back towards pre-Covid consumption patterns, which she added would be “related to the evolution of the pandemic around the world.”
McGuinness: High voter turnout will reflect City’s diversity
Writing in City AM, Catherine McGuinness, the policy chair for the City of London Corporation, urges people to register to vote ahead of the City of London elections in March next year. “The diversity of our community needs to be reflected in its representatives,” she says, “so we need to see strong registration and turnout figures, as we emerge from the pandemic.”
Amazon strikes deal with UK spy agencies to host top-secret material
Amazon’s cloud computing arm, AWS, has been contracted by the UK’s three spy agencies to host classified material in a deal aimed at boosting the use of data analytics and artificial intelligence for espionage.