BANKING
Big banks land extra £5.5bn by failing to pass on rates
Four of Britain’s biggest banks have landed an extra £5.5bn by failing to pass on rising interest rates to savers. While banks have passed increases in the Bank Rate to mortgage borrowers, savers have not seen a jump in returns. Recent annual reports show that Barclays, NatWest, Lloyds and Santander reported large increases in their net interest income – the difference between what they charge borrowers and pay savers. Lloyds Banking Group reported an uplift of £2bn last year, with net interest income rising from £11.2bn to £13.2bn. Its net interest margin – the difference between what it charges for loans and pays out on deposits – increased from 2.54% to 2.94%. NatWest Group’s net interest income rose from £7.5bn to £9.8bn, with its net interest margin up from 2.3% to 2.85%. Barclays saw income climb from £5.2bn to £5.9bn and its net interest margin was 2.86%, compared with 2.52% the year before. Net interest income at Santander UK rose by £475m, from £3.9bn to £4.4bn. MP Danny Kruger, a member of the Treasury Select Committee, has called on the Financial Conduct Authority to take action on banks’ failure to pass on interest rate rises. He said: “Something is going wrong when banks are profiting from rising interest rates while savers aren’t seeing the benefits."
Regulator reduces red tape for small banks
The banking regulator has announced plans to reduce restrictions on small banks. The Prudential Regulation Authority (PRA) will look to mitigate the “complexity problem” - where small banks face higher costs than large banks when interpreting and implementing financial regulations. The PRA has proposed simplifying disclosure and liquidity rules, while simpler rules around payments would look to “increase proportionality” of the pay regime by reducing the regulatory burden on small firms. Under the Financial Services and Markets Bill, the PRA will be required to consider competitiveness alongside its primary objective to maintain financial stability. Vicky Saporta, executive director at the Bank of England, said: “The importance of competition means that we need to act when rules that are proportionate for large firms are not proportionate for small ones. Doing so removes barriers to entry.”
INTERNATIONAL
Gadhia left UniCredit board over leak probe
It has been claimed that Dame Jayne-Anne Gadhia resigned from the board of UniCredit after unsubstantiated allegations that she was the source of boardroom leaks. Sources say she was interviewed by chair Pier Carlo Padoan and group legal officer Gianpaolo Alessandro as part of an investigation that sought to identify the source of several media stories. Ms Gadhia, the former chief executive of Virgin Money, reportedly chose to step down as head of the Italian bank's remuneration committee as a matter of principle, feeling her position had become "untenable." She remains a senior adviser to UniCredit.
Missing CEO assisting authorities, says bank
China Renaissance Holdings says chief executive Bao Fan, who went missing eleven days ago, is cooperating with Chinese authorities conducting an investigation. The announcement was the first time that China Renaissance has given a reason for the disappearance of its founder, although it did not provide any details about the investigation or Mr Bao's whereabouts. Authorities reportedly took Mr Bao away earlier this month to assist in an investigation into Cong Lin, China Renaissance's former president.
Sabadell to sell payments arm
Spanish bank Sabadell has agreed to sell its retailers' payments business to Nexi for up €350m, while also striking a 10-year partnership with the Italian payments firm. Under the deal, Nexi will buy 80% of Paycomet, Sabadell's payments subsidiary, with the Spanish lender retaining a 20% stake for at least three years.
FINANCIAL SERVICES
Fund labelling regime ‘needs to be tougher’
The Financial Inclusion Centre (FIC) says the Financial Conduct Authority’s (FCA) fund labelling regime needs to be “tougher” and give regulators “full powers to drive the transition.” The not-for-profit policy group has set out recommendations for improvements to FCA plans that would see investment funds categorised according to their environmental and social impact. The report says the proposed regime should include red alerts for products which damage the environment. It also calls for clearer definitions to avoid ‘impact washing’, statutory regulation of ESG ratings providers and for the regime to apply to a broader range of products. FIC director Mick McAteer said the group “remains concerned about the effectiveness" of the labelling regime, warning that it is “too reliant on the goodwill and voluntary actions of asset managers and product providers.”
City Minister criticises consumer duty
City of London Minister Andrew Griffith has raised concerns over the Financial Conduct Authority’s (FCA) planned consumer duty, warning that it could impose tougher regulations on the financial services industry at a time when ministers are looking to loosen the regulatory burden on the sector, post-Brexit. While ministers have urged the FCA to strengthen consumer protection, sources say Mr Griffith wants to avoid a "compensation culture" with frivolous lawsuits. Matthew Nunan, the former head of wholesale enforcement at the FCA and now partner at law firm Gibson Dunn, has questioned Mr Griffith’s stance, saying it is “strange, but perhaps not that surprising given recent times,” that a minister “is criticising the FCA for doing exactly what the Government has told it to do.” An FCA spokesperson said the consumer duty would “bring about a cultural shift in financial services” and set “higher and clearer standards for firms,” adding that it “will encourage innovation while driving competition and growth” in the financial services industry.
BTG Banner - Wc 20.02.23 - PLACED IN MIDDLE OF SUMMARY
 |
MANUFACTURING
Manufacturer to add activist investor’s nominees to board
Industrial equipment manufacturer Rogers is to add activist investor Starboard Value’s two nominees as directors to its board. Rogers said it has appointed former Linde executive Anne Roby and former C&D Technologies chief Armand Lauzon as new independent directors.
MEDIA & ENTERTAINMENT
Twitter reduces headcount again
Twitter has reportedly laid off at least 200 staff in another round of cuts, with sources saying the social media platform has let 10% of its current workforce go. The fresh round of job cuts comes after chief executive Elon Musk sacked about 50% of its 7,500 employees when he took over in October. The tech industry has seen a number of firms reducing their headcounts in recent months, with Amazon, Microsoft and Google-owned Alphabet all announcing job losses, while January saw more than 10,000 jobs lost in eight days across six large tech companies including Spotify, Intel and IBM.
RETAIL
John Lewis boss exits
John Lewis has announced that executive director Pippa Wicks is leaving after just three years, leaving her position with immediate effect. Ms Wicks, who joined as head of the department store business in 2020, has been replaced by retail director Naomi Simcock on an interim basis. Ms Wicks joined John Lewis from the Co-op as part of a management restructure to create separate bosses for the John Lewis and Waitrose supermarket businesses.
ECONOMY
Economists forecast smaller fall in UK output in 2023
The economic outlook has improved, with data from Consensus Economics showing that, on average, analysts expect a 0.6% fall in UK GDP in 2023, having previously predicted a 1% decline.
OTHER
FTSE bosses braced for takeovers
A study from investment bank and broker Numis shows that almost 90% of FTSE 250 directors believe UK firms are vulnerable to foreign takeovers this year due to the weak pound and falling valuations. Numis said foreign takeover interest this year was likely to come amid a rebound in wider M&A activity, following a sharp downturn last year. The poll saw 95% of directors say they expect an uptick in mergers and acquisitions this year, with the same proportion expecting the financing environment to rebound – which could allow private equity firms to pursue more big deals.