BTG Advisory
David Abbott: Care homes brace for winter challenges
BTG Advisory’s David Abbott looks ahead to the pressures care homes will face this winter. Surging costs, ongoing labour shortages and increasing regulatory pressures are among the burdens putting poorly prepared homes at risk of insolvency. Increasing insurance costs are another drag on care homes’ balance sheets. Becky Newman of Howden Insurance Brokers explains that a rise in care home insurance premiums of between 300 and 400% is due to an unwillingness on the part of insurers to underwrite the risk since the pandemic. Abbott goes on to explain that some care home operators increased borrowing during the pandemic to survive and are now over-leveraged and exposed to higher interest rates. “The net effect of dwindling revenues and rising costs is an operating margin squeeze which, in some cases, is an insolvency risk.”
BANKING
Complaints about bank scams soar
The Financial Ombudsman Service (FOS) received nearly 25,000 complaints about current accounts in the year to March - more than any other product. The watchdog says a big chunk of these were from victims of "authorised" fraud, such as customers being tricked into transferring money into other accounts often by scammers posing as their bank. Complaints to the FOS about these swindles jumped by more than a fifth to 9,370 in the last financial year - and around 75% were upheld in the consumers' favour. The FOS said: "Over the last year, we have also seen an increase in scams involving social media, and scams relating to fake investments. Based on analysis of our casework, the increase could be partly driven by people trying to make additional income when they were on furlough during the pandemic."
PRIVATE EQUITY
MPs warned shutting investor tax breaks could choke off start-up investment
The heads of UK venture capital bodies told MPs on Monday that the closure of tax incentives for investors could choke off the flow of capital into UK start-ups and restrict the growth of the country’s tech sector. Schemes like the Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) regime have allowed retail investors to claim back hefty tax relief on their investments. However, a ‘sunset clause’ for EIS and VCT has been introduced by the Treasury, shutting out relief to subscriptions made on or after 6 April 2025. Speaking at a Treasury select committee hearing, Will Fraser-Allen, Chair designate at The Venture Capital Trust Association said: “There is an absolute recognition that what we do is high risk. We’re backing young companies without track records and a significant number will fail. But what the tax incentives are designed to do is to unlock the pool of capital from retail investors, and whenever we have surveyed our shareholders we always comes back with absolute resounding confirmation that it is because of those tax incentives.”
BC Partners explores sale of Zest Anchors
BC Partners is exploring the sale of Zest Anchors, the California-based dental products manufacturer it bought for 2018. The London-based private equity firm is looking to sell for over $1bn.
Actis to buy 10% of Brazil's Omega Energia
British private equity firm Actis LLP is to acquire 10% of the capital stock of Brazilian renewable energy company Omega Energia for around 770m reais ($147m).
Bob Diamond’s private equity firm raises funding from Qatar
Bob Diamond’s private equity group Atlas Merchant Capital has struck a deal with Qatar to fund a new distressed asset vehicle.
INTERNATIONAL
France’s approval of crypto exchange Binance branded ‘incomprehensible’ by MEP
The French markets regulator is being urged to review its May decision to approve crypto exchange Binance, with one European lawmaker, Aurore Lalucq, complaining that the ruling gave Binance a “guarantee of respectability”. In a letter to the Autorité des Marchés Financiers, the French MEP and member of the European parliament’s Committee on Economic and Monetary Affairs said the regulator’s decision was “surprising and even worrying . . . especially since many other supervisors, and not the least significant ones, have already refused to give Binance any form of registration or approval.”
Credit Suisse bank found guilty over money laundering charges
Credit Suisse has been found guilty and fined for involvement in money laundering related to a Bulgarian drugs ring. Switzerland's criminal court found that the bank did not do enough to prevent members of the crime syndicate from profiting off the trafficking of cocaine in to Europe. It was fined around £1.7m and ordered to pay £15m to the Swiss government. The bank denies wrongdoing and says it would appeal against the ruling.
FINANCIAL SERVICES
UK aims for quick reform of insurer solvency rules
Rishi Sunak yesterday told insurance executives that Britain wants to reform its insurer solvency rules quickly. The Chancellor and Economic Secretary to the Treasury John Glen met the bosses of Aviva, Legal & General, Lloyd’s of London and the Association of British Insurers at a meeting to help to draw up Solvency II reforms. The Chancellor “made clear that… the aim is to deliver these ambitious reforms at pace, with our consultation closing on Thursday 21st July,” a Treasury statement said.
Coinbase will need to make further cuts, Goldman says
Goldman Sachs analysts say Coinbase will need to make “substantial reductions” in its costs as retail trading activity dries up. Further job losses at the cryptocurrency exchange are expected, the banks says. Coinbase already announced plans to cut about 1,100 roles in preparation for what its boss warned could be a “crypto winter”.
REAL ESTATE
Lecturers' pension scheme in talks about Butlin's deal
Britain's biggest private pension fund is reportedly in advanced talks to buy into the real estate assets of Butlin's, the holiday camp operator, in a deal worth more than £300m. The investment arm of the Universities Superannuation Scheme (USS) is closing in on an agreement that will effectively see it becoming the resort chain's landlord. If completed, it would be among the most prominent deals struck for years by USS Investment Management. Bourne Leisure Group, Butlin's owner, is in separate discussions with one potential buyer of the three-site chain's operating business, according to insiders.
RETAIL
High street footfall drops
New analysis reveals high street footfall fell 25% in May, from the previous month, with the biggest decreases seen in Glasgow (down 54%), Newcastle (down 40%) and Brighton (down 39%). However, Guildford and Leeds bucked the trend, increasing 8% and 2% month on month, and were the only two cities to exceed pre-pandemic levels in May. London’s retailers have suffered the biggest drop from pre-COVID-19 levels, down 68%, as hybrid working patterns and rising inflation keep customers away from the shops.
ECONOMY
Bank of England workers to demand a pay rise
Unite is consulting staff at the Bank of England this summer about securing a “decent pay rise” to cushion the blow of soaring living costs. Threadneedle Street workers received a 1.5% increase this year, far below the 9.1% rate of inflation reached in May. The union’s regional officer Steve O’Donnell refused to be drawn on how big an increase it will ask for but did not rule out demanding an inflation-matching raise. A dispute over pay would be extremely embarrassing for the Bank’s governor, Andrew Bailey, who has been accused of failing to recognise the signs ahead of the inflationary crisis the UK finds itself in. He has also urged “restraint in pay bargaining” otherwise inflation can get out of control. The position was supported by Treasury minister Simon Clarke who earlier this month said: “We have to be very careful at this point about preventing inflation from becoming a self-fulfilling prophecy."