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Daily News Roundup: Tuesday, 28th November 2023

Posted: 28th November 2023

BANKING

Metro Bank shareholders back rescue deal

Metro Bank shareholders have voted "overwhelmingly" in favour of a £925m rescue deal, with nearly 93% of votes backing the package which includes £325m in new funding and the refinancing of £600m of debt. Under the deal, billionaire Jaime Gilinski Bacal will become Metro's controlling shareholder with a 53% stake via his firm, Spaldy Investments. Shareholder backing comes with bondholders having already backed the plan in October. A Metro Bank spokesperson said: “This is testament to their belief and confidence in the future of Metro Bank and proves there is a place in retail and business banking for our model of stores in major towns and cities, combined with online and mobile banking and great customer service.”

Santander chair welcomes scrapping of banker bonus cap

Santander’s executive chair, Ana Botín, says the removal of the bonus cap for bankers “makes a lot of sense,” suggesting that if Europe follows suit it would allow “better alignment with shareholders.” Ms Botín told the Global Banking Summit that Santander would consider changing how it pays staff in London after the scrapping of the cap, saying: “It's a business where you should be compensated in a variable way, so I think it's good news for our industry, it makes a lot of sense,” adding: “I'm sure we will adapt to that.”

Barclays eyes Metro Bank’s £3bn mortgage portfolio

Barclays is reportedly in talks to buy a £3bn residential mortgage book from Metro Bank. The sale would strengthen Metro Bank’s capital position. The bank has been in talks with prospective buyers about offloading homeowner loans as part of a funding package announced in October. While Lloyds, NatWest and HSBC had been touted as possible buyers, Barclays has reportedly entered exclusive talks over acquiring the loan book. 

INTERNATIONAL

JPMorgan expands payments and corporate banking in Abu Dhabi

JPMorgan is expanding its payments and corporate banking businesses in Abu Dhabi after receiving approval from regulators. The Financial Services Regulatory Authority has granted in-principle approval to upgrade JPMorgan's license to category one. The bank plans to take deposits and offer payments processing to wholesale banking clients from the Abu Dhabi Global Market. JPMorgan has had a physical presence in the UAE for over a decade and set up a legal entity in the Abu Dhabi Global Market in 2021.

BNP Paribas unit acquires majority stake in ICCREA's insurance arm

BNP Paribas Cardif has acquired a majority stake of 51% in the insurance arm of Italy's BCC ICCREA. The deal allows BNP Paribas Cardif to sell life insurance through ICCREA's banks for the next 15 years. ICCREA is the second largest banking group in Italy, and BNP Paribas Cardif will exclusively distribute its life insurance products through ICCREA's 116 cooperative banks.

BoE official appointed RBA deputy governor

Bank of England (BoE) official Andrew Hauser has been appointed deputy governor of the Reserve Bank of Australia (RBA). Mr Hauser, executive director of the Bank of England's markets division, will join the Australian central bank early next year. The position has been vacant since Michele Bullock was promoted to governor of the Australian central bank two months ago.

Macquarie Asset Management launches first Australian active ETFs

Australia's Macquarie Asset Management has launched its first actively managed exchange traded funds (ETFs) to compete with other global managers. The new ETFs aim to shake up the market and provide investors with more options. "We believe that active management can add value for investors," said John Leonard, CEO of Macquarie Asset Management.

FINANCIAL SERVICES

FCA: IFPR improvements required

The Financial Conduct Authority (FCA) says investment firms need to improve their understanding of reporting requirements as part of the Investment Firms Prudential Regime (IFPR), which was introduced in January 2022. The regulator says it has seen examples of "significant failings" in the application of capital models for operational risks, while inadequate assessment of liquid asset requirements have put some firms at risk of failing. The FCA said that while firms have made progress in understanding the requirements of the IFPR, there remain “some areas for improvement." The City watchdog says firms must “act now to consider our findings and assure themselves that they are meeting our rules and are mitigating harm from their operations."

Activist investor seeks changes at Crown Castle

Activist investor Elliott Investment Management is calling for executive and board changes at real estate investment trust Crown Castle. Elliott, which holds a $2bn stake in Crown Castle, has hit out at a lack of oversight, flawed financial policy, and underperformance. Elliott said Crown Castle "suffers from a profound lack of oversight by the board, which has contributed to its irresponsible stewardship and flawed financial policy." This is not the first time the US hedge fund has pressured Crown Castle for change, having asked the company's management to rethink its infrastructure strategy three years ago.

MEDIA & ENTERTAINMENT

BT withdraws from takeover talks with MusicMagpie

BT and German investor Aurelius Group have both withdrawn from takeover talks with MusicMagpie. The firm, which listed on the London Stock Exchange two years ago with a valuation of £200m, is now worth just £17m. The company has struggled to expand in the US and has faced declining revenues due to the popularity of streaming services and a decline in book sales.

REAL ESTATE

Built environment puts pressure on net zero goal

Chris Hayward, policy chair of the City of London Corporation, says that while the City is on course to become operationally net zero by 2027, “there remains a lot of work to do” within the built environment sector. He notes that this sector accounts for around 42% of the City’s total carbon emissions. Mr Hayward says the corporation has issued advice on how planning applicants can ensure that carbon emissions resulting from development are reduced as much as possible. The corporation, he adds, is moving towards a “retrofit first” approach, where the reuse and refurbishment of existing buildings, structure and materials must be given serious consideration in any planning application.

Cyber-attack hits home sales

Property buyers have seen home completions delayed after CTS, a company which provides IT services to law firms, was hit by a cyber-incident. The issue at CTS is having a knock-on effect on firms involved in property completions, with around 80 law firms believed to have been affected. CTS said it is “working closely with a leading global cyber forensics firm to help us with an urgent investigation into the incident and to assist us in service restoration.” The property law regulator, the CLC, has confirmed there has been disruption to some transactions. The regulator says law firms need to work together to avoid disruption.

RETAIL

Black Friday transactions down 0.63%, says Barclays

Data from Barclays shows that payment transactions on Black Friday were down 0.63% year-on-year.

ECONOMY

Rates need to stay higher for longer, analysts warn

Analysts at S&P Global Ratings have warned that interest rates will have to remain higher for longer in order to meet the Bank of England's inflation target. The report says monetary policy “will have to remain restrictive for longer to return the inflation rate to 2% on a sustainable basis.” The credit ratings agency has forecast that the Bank will not begin cutting base rate until the second half of 2024. S&P also warned that Britain faces “yet another year of economic weakness in 2024 with GDP growth of just 0.4%, as interest rates remain restrictive for an extended period.” Meanwhile, Mark Haefele, global wealth management chief investment officer at UBS, says better than expected business activity has dampened expectations of impending rate cuts. He said the chance of the Bank of England cutting rates before June is down from 97% on November 20 to 36%.

Bailey: Hitting inflation target will be 'hard work'

Bank of England governor Andrew Bailey says getting inflation down to the Bank's 2% target will be "hard work," saying that while recent falls have been driven by surging energy costs falling back, “the rest of it has to be done by policy and monetary policy.” He went on to warn that policy is “operating in what I call a restrictive way at the moment - it is restricting the economy.” Inflation, which last year hit a peak of more than 11%, has since fallen to 4.6%. The Bank of England says it does not expect inflation to return to the 2% rate until the end of 2025. Mr Bailey also warned that, despite recent falls in inflation, interest rates will not be cut in the "foreseeable future" as the Bank looks to hit the 2% target.

OTHER

PM welcomes foreign firms' £29.5bn 'vote of confidence'

As he hosts a group of leading business figures at the Global Investment Summit, Rishi Sunak says £29.5bn of new investment has been promised by foreign firms. This, the Prime Minister says, serves as a "huge vote of confidence" in the UK economy. Australian funds IFM Investors and Aware Super will invest £10bn and £5bn respectively, while Spanish power giant Iberdrola will invest £7bn. Microsoft will also invest £2.5bn in AI infrastructure. At the last summit, which was held in 2021, companies promised to invest nearly £10bn in the UK.

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