BANKING
Government bank stalled on fraud squad meetings
The Mirror reports that officials from the government-owned British Business Bank (BBB) did not hold any formal meetings with the anti-fraud squad until after almost all Covid loans had already been handed out. While Government-backed loans of up to £50,000 were handed out from May 2020 as part of the Bounce Back Loans Scheme, the BBB, which was responsible for overseeing the scheme, only began holding formal meetings with the National Investigation Service and the National Crime Agency on September 16, 2020. By that time 80% of the £47bn handed out in loans had already gone out. The British Business Bank says officials had held discussions on fraud as part of roundtables with crime agencies before the formal meetings began. An estimated £6.7bn was lost to fraud and error across all of the Government’s pandemic support schemes for businesses and individuals.
Barclays chief to undergo treatment for cancer
Barclays has announced that its chief executive, CS Venkatakrishnan, has been diagnosed with non-Hodgkin lymphoma and will be undergoing treatment in New York for the next 12 to 16 weeks. “During this period, the company will run normally, and I will continue to be actively engaged in managing it. However, I will have to work from home for some periods and not be able to travel", he said.
INTERNATIONAL
Spanish banks consider legal challenge to bank tax proposal
Spanish banks Bankinter and Caixabank are considering challenging the government's new banking tax proposal in court. The Spanish government aims to raise €3bn by 2024 with a proposed windfall tax for banks and large energy companies.
Credit Suisse shares dive as stability concerns spread
Credit Suisse shares fell more than 8% on Monday, as fears over the banks’ stability spread after it said last week it expects to make a pre-tax loss of up to 1.5bn Swiss Francs, following a £74bn flood of withdrawals which caused it to breach some liquidity buffers.
AVIATION
Rolls-Royce tests hydrogen-fuelled aircraft engine
Rolls-Royce has successfully used hydrogen instead of conventional jet fuel to power a modern aircraft engine in a world first for the aviation industry, according to the company. A joint project with easyJet, the test took place at Boscombe Down, a British military facility in Wiltshire. The engineering company said the ground test was a “major step towards proving that hydrogen could be a zero-carbon aviation fuel of the future”.
FINANCIAL SERVICES
FCA expects 1,000 former BSPS members to receive redress
The Financial Conduct Authority (FCA) says firms should provide British Steel pension scheme members with their redress calculation by the end of 2023, if individuals opt to receive it as a lump sum. The watchdog added that those opting to receive redress as a payment into their pension should receive their calculation by February 2024. In its final rules for a redress scheme for BSPS members who received unsuitable advice, the FCA said former steelworkers who were wrongly advised to give up gold-plated pensions are to receive £49m in compensation. Therese Chambers, director of consumer investments at the FCA, said: “We will be keeping a very close eye on firms as they go through this process, “ adding: “If they do not abide by our rules, then we will be holding them to account using our usual supervisory and enforcement tools.” Firms will have to provide details of all cases rated as 'suitable' to the FCA so it can check if consumers would like the Financial Ombudsman Service to independently review their advice. The City watchdog expects more than 1,000 consumers to receive redress as a result. Sheldon Mills, the FCA’s executive director for consumers and competition, said: “We will be watching advisers closely and have put in place checks so that consumers can have confidence that they’re being treated fairly under the scheme.”
Watchdog cannot prevent investment losses in Ltafs
Financial Conduct Authority (FCA) chief executive Nikhil Rathi says the watchdog cannot ensure that retail investors do not encounter investment losses in a long-term asset fund (Ltaf). In a letter to Dame Angela Eagle, the former interim chair of the Treasury Committee, Mr Rathi said Ltafs will be risk taking vehicles, and some illiquid assets will be comparatively risky. He also outlined the protections that will be put in place, should the Ltaf be made available to retail investors – including risk warnings in any promotions for the product. Investors will also be told of the scope of protection available through the Financial Services Compensation Scheme and Financial Ombudsman Service. Mr Rathi said the regulator’s provisions and overall supervisory approach “cannot and are not intended to ensure that no investment losses would arise in an Ltaf.” He added that the provisions “are intended to ensure investors take these risks knowingly.”
Crypto firm files for bankruptcy after FTX collapse
Crypto firm BlockFi has filed for bankruptcy in the US as the industry continues to feel the impact of the collapse of FTX. BlockFi had already halted most activity on its platform, citing "significant exposure" to FTX, and is now seeking court protection to restructure, settle its debts and recover money for investors. A court filing from BlockFi, which offered loans backed by borrowers' crypto assets, says it owes money to more than 100,000 creditors. Mark Renzi of Berkeley Research Group, the crypto company's financial advisor, said BlockFi “looks forward to a transparent process that achieves the best outcome for all clients and other stakeholders."
Crypto fraud jumps by a third in UK
Action Fraud data shows that UK crypto fraud rose by a third in one year, with financial losses involving crypto hitting £226m in the year to September 2022 - a 32% year-on-year increase.
LEISURE & HOSPITALITY
Marston’s reveals World Cup drinks boost as results delayed
Marston’s has hailed boost from World Cup matches as the pub giant pushed back the release of its full financial results due to an auditing delay. The firm said that it has seen "encouraging" trading since the start of October, with like-for-like sales in its managed and franchised pubs up 6.8%, and up 5% on pre-pandemic levels. It also highlighted positive sales around the World Cup, reporting that like-for-like sales were around 30% higher for the two England games than on equivalent days last year.
MEDIA & ENTERTAINMENT
Social media firms told to protect the young
Culture Secretary Michelle Donelan says social media giants will face “severe punishments” if they fail to stop young children using their platforms. While most social media sites require children to be aged 13 and over to create an account, there are concerns that simple “self-declaration” age checks are easily bypassed. Ofcom analysis in October found that a third of children on the sites had faked their ages to pass themselves off as being over 18. Amendments to the Online Safety Bill will require social media companies to inform parents of how they will enforce minimum age limits. They will also be required to publish their risk assessments for children. Failure to comply with the laws could lead to companies facing fines of up to 10% of worldwide revenue.
BT and unions agree pay rise to stop more strikes
Telecoms firm BT has agreed a pay deal with union bosses that will see workers who earn £50,000 or less get a £1,500 pay rise next year. The agreement, which BT says will benefit 85% of its UK workforce, could lead to the end of strike action at the company. The pay rises cover all frontline staff, and 51% of managers in the UK. It also includes Openreach workers. Both the Communication Workers' Union and Prospect will ballot their members and recommend backing the deal.
REAL ESTATE
House price growth slows
Figures from Zoopla show that UK house price inflation slowed to 7.8% in October. This is down from 8.1% in September and represents the lowest growth rate recorded since November 2021. The report also shows that since the start of September, a quarter of homes have had their original asking price reduced, with one in nine seeing a reduction of 5% or more. The analysis shows that demand has fallen 44% since September’s mini-Budget, which pushed up mortgage rates and unsettled the markets. Zoopla expects mortgage rates to fall to about 5% at the turn of the year, from about 6% now for two-year and five-year fixed deals. With the Bank of England predicting a prolonged recession, Zoopla expects prices to fall by 5% in 2023 and sales volumes to fall to 1m, from 1.3m this year. Richard Donnell, executive director of Zoopla, said: “While the outlook for house prices is weak, we see a shift to more ‘needs driven’ motivations to move in 2023 and beyond which will support sales volumes. He added that while the housing market “is adjusting to a reset in the level of mortgage rates … the likelihood of double digit house price falls at a UK level remains low.”
RETAIL
Winter chill brings gloom for retailers
The CBI's latest quarterly distributive trades survey has found that British retailers are "feeling the chill" as their sales plummet in what should be their busiest time of the year. The survey’s headline reading showed that a net balance of 19% of retailers reported a fall in sales in the year to November. That was a sharper-than-expected drop off from the 18% that reported a rise in annual sales in October. The CBI added that retailers are not expecting a dramatic upturn in sales in the short term: a net balance of 22% are pessimistic about the outlook for the next three months. Martin Sartorius, the CBI's principal economist, said the survey results “ underline what a tough time it is for the sector”. He added: “It's not surprising that retailers are feeling the chill as the UK continues to be buffeted by economic headwinds. Sales volumes fell at a firm pace in the year to November, and retailers remain notably downbeat about their future business prospects. This pessimism is reflected in investment intentions worsening to the greatest extent since May 2020.”
ECONOMY
UK households set to spend 65% more this Christmas
WorldRemit’s 2022 Cost of Christmas Study suggests that UK households are set to spend 65% more this Christmas than last year due to inflation and the rising cost of living. The typical outlay over the Christmas period is estimated to hit £905, including around £145 for food and £590 on gifts.
OTHER
City workers ignoring calls to return to offices
City workers are ignoring calls from executives for staff to be in the office for a minimum number of days each week, according to a new report based on interviews with 100 workers in major companies. The study suggests that staff and managers in the financial and professional services sectors are employing “bespoke” working models that align with their specific operational needs. The report argues that remote-first policies have no detrimental impact on productivity, with respondents saying that flexible working policies have the potential to significantly boost productivity and provide greater efficiency. Dr Grace Logan, an economist at LSE, warns that demands from top level executives that workers come in for a minimum number of days each week are “ego driven rather than having the best interests of the business in mind.” Anna Lane, president of Women in Banking and Finance, said managers demanding “rigid” schedules, requiring workers come in for “3,4, or 5” days each week will “lose out to their competitors who do not.” The researchers interviewed workers at companies including Bank of America, BlackRock, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan, Morgan Stanley, NatWest, Schroders and UBS.