BANKING
BoE set to delay overhaul of banking rules
The Bank of England is planning to push back implementation of the final round of Basel reforms by six months. The reforms, a regulatory overhaul in the wake of the financial crisis, set new minimum standards for liquidity and capital requirements. While regulators announced implementation at the start of 2025, US officials recently pushed back the implementation deadline until July 2025. The Prudential Regulation Authority is reportedly preparing to do the same – and will also cut the five-year phasing in by six months. It is noted that the delay comes amid a deluge of industry feedback, with a number of banks voicing concern over the impact the regulations will have on lending to small businesses. Under the new rules, regulators will take away preferential treatment for small businesses, a move which banks warn could dramatically reduce SME financing.
Banks plan global approach to disclosing stock positions
Goldman Sachs, HSBC, Barclays, BNP Paribas, and another bank are working together to adopt a common global approach to disclosing clients' stock positions. The group is developing a tool to minimise the risks of under-reporting, particularly for short bets and derivative-based stakes. Regulators require investors to report securities when certain thresholds are breached. The initiative, called Endoxa, is the first bank-led consortium to tackle global rules on disclosure reporting. The banks will work with tech specialist Droit and a law firm to write a common digital machine-readable code for consistent compliance. The consortium hopes to attract more banks over time to harmonise reporting rules.
Steady interest rates a ‘welcome pause’ for banks
Experts say the Bank of England’s decision to keep interest rates on hold at 5.25% is a “welcome pause” for high street banks. Analysts at Barclays said: “A pause in rate hikes is positive for the UK and its banks, particularly if adverse deposit trends … can moderate from here as we expect,” while Tomasz Noetzel, banking analyst at Bloomberg Intelligence, said: “Deposit repricing and a shift towards more expensive time products may now slow,” adding that falling mortgage rates would likely “bolster volume.”
Santander to slash mortgage rates
Santander has announced rate reductions and new deals after the Bank of England decided to pause interest rate hikes. The lender is launching a 4.95% 60% loan-to-value (LTV) five-year fixed rate mortgage, which falls below the average rates. The lender is also set to reduce all residential fixed rates by between 0.1% and 0.36%. Michelle Lawson, director at Lawson Financial, said more cuts are likely as other lenders look to follow Santander's lead. According to UK Finance, around 800,000 fixed-rate mortgage deals are due to end in the second half of this year and 1.6m are due to end next year.
INTERNATIONAL
SEC escalates probe into private messaging apps
The US securities regulator has escalated its probe into Wall Street's use of private messaging apps by collecting thousands of staff messages from major investment companies. The Securities and Exchange Commission (SEC) had previously asked the companies to internally review the messages in its investigation into the use of unapproved messaging apps. The SEC's investigation has now expanded to investment advisers, and it has asked for messages on personal devices or applications during the first half of 2021 that discuss business. "It increases risk," said one source. The SEC's crackdown on record-keeping rules has already resulted in over $2bn in fines.
Italian banks to pay one-off banking tax despite government offer
Italy's larger banks are still expected to pay a one-off banking tax, despite the government planning to give lenders the option to boost non-distributable reserves instead. The tax will be capped at 0.26% of risk-weighted assets, benefiting banks with a higher proportion of Italian government bonds. Societe Generale expects banks to pay the tax, while Banca Akros and Equita believe it will allow lenders to maintain more flexibility over their remuneration policy. State-owned Monte dei Paschi di Siena and ICCREA are expected to be the biggest beneficiaries as they do not plan to pay dividends this year. The tax will be based on risk-weighted assets, benefiting banks with a lower risk density.
DWS pays $25m to settle SEC probes
Asset manager DWS, which is majority-owned by Deutsche Bank, will pay $19m to settle Securities and Exchange Commission charges over greenwashing, while anti-money laundering violations took the total penalty to $25m.
Senior Nomura banker banned from leaving China
Beijing has reportedly blocked Charles Wang Zhonghe, a senior Hong Kong-based banker at the Japanese lender Nomura, from leaving mainland China over an investigation into the country's leading technology dealmaker.
AUTOMOTIVE
Nissan to go all-electric by 2030
Nissan says all vehicles sold in Europe will be electric by 2030, despite the UK postponing its ban on the sale of new petrol and diesel cars from 2030 to 2035. Nissan's chief executive Makoto Uchida said the firm believes the move “is the right thing to do for our business, our customers and for the planet.” Mr Uchida also said that Nissan is fast-tracking all-solid-state batteries, which are lighter, cheaper, and quicker to charge.
Lloyds reports 74% surge in vehicle scams
Lloyds Bank has recorded a 74% surge in the number of reports of vehicle scams in the first half of this year, with victims losing nearly £1,000 on average. Lloyds said victims are losing an average of £998, with people aged between 25 and 34 being the most likely age group to report being duped.
AVIATION
Airbus prepares to revamp senior leadership team
Airbus plans to restructure its senior leadership by appointing a dedicated head for its civil aircraft business, with chief commercial officer Christian Scherer set to take the role.
FINANCIAL SERVICES
FCA proposes new diversity and misconduct rules
The Financial Conduct Authority (FCA) and Prudential Regulation Authority have set out proposals to boost diversity and inclusion across the financial services industry. The rules would require large banks and insurers to report diversity and inclusion data to regulators and set new targets to address under-representation. In a consultation paper, the bodies say firms would have to develop a diversity and inclusion strategy setting out how they will meet their objectives and goals. They would also be expected to collect, report and disclose data on characteristics such as disability and ethnicity of staff, while factors such as socio-economic background and gender identity may also be logged. Bank of England deputy governor Sam Woods said: “The proposals set flexible, proportionate minimum standards to raise the bar, placing more requirements on larger firms.” Nikhil Rathi, chief executive at the FCA, said: “UK financial services has long been a magnet for best-in-class talent globally. Increasing levels of diversity within firms can help attract and unlock talent, supporting the sector’s international competitiveness.”
REAL ESTATE
Demand for office space rises, with banks leading the way
Demand for London office space has increased as banks take a tough stance on staff attendance. Figures show that firms sought 11.8m new square feet in August, a 44% increase compared to the same period last year. Banks are the most active sector in terms of demanding space, followed by professional services and the technology, media, and telecom sector. It is noted that banks including JPMorgan and Goldman Sachs expect to see staff in the office most days.
RETAIL
Retail sales slip in September but optimism is up
Retail sales fell for the fifth consecutive month in September, according to the Confederation of British Industry (CBI). The analysis shows that 20% of retailers said sales volumes in September were up compared the same period last year, while 34% said they were down, giving a balance of -14%. September’s reading is the highest in three months and marks an improvement on August’s -44%. It also exceeds forecasts, which had pointed to September’s figure coming in at -21%. Retailers' expected sales balance for October rose to -8. Martin Sartorius, CBI principal economist, said: “There are some elements of optimism in our survey with retailers expecting the recent fall in sales to continue to ease.” He added that recent lower than expected inflation figures will ease pressure on household budgets and “give retailers some hope going into the crucial autumn and winter trading period.”
Activist investor snaps up stake in The Works
Activist investor Kelso has purchased a 3.2% stake in retailer The Works, aiming to restore the firm's intrinsic valuation after a significant share price slump. Kelso said it believes in the strategy and product range of The Works, especially at the value end of the product spectrum. It supports the current board and plans to vote in favour of most resolutions at the annual meeting, except for a dividend recommendation. Instead, Kelso suggests using cash to buy back shares.
ECONOMY
ECB chief: Interest rates will stay high 'as long as necessary'
European Central Bank (ECB) president Christine Lagarde says interest rates will stay high enough to restrict business activity for "as long as necessary" in a bid to tame inflation. She told the European Parliament´s committee on economic and monetary affairs: "We remain determined to ensure that inflation returns to our 2% medium-term target in a timely manner," adding: "Inflation continues to decline but is still expected to remain too high for too long." Annual inflation in the eurozone eased from 5.3% in July to 5.2% in August. The ECB last week raised its benchmark deposit rate to a record high of 4%.