FCA tells banks to make hubs a priority
The Financial Conduct Authority (FCA) has told banks to make banking hubs a “priority” in the coming months. While ten new hubs have been announced since December last year, none have yet opened. This means only two shared branches are currently in operation – one near Glasgow and another in Essex – with a risk that these pilot sites will shut next April when their future is reviewed. The FCA said: “Firms need to pick up the pace and deliver more banking hubs. We expect this to be done as a priority.” The financial regulator added: “Banks and building societies must treat their customers fairly and provide alternatives to branches where needed.” The hubs, which customers of all big banks can use, have been identified as the best way to keep banking services on the high street despite a wave of branch closures. So far this year, 433 branches have either been closed or put on notice of being shut. Under the new Financial Services Bill currently making its way through parliament, the FCA will be empowered to ensure banks maintain reasonable access to cash on the high street through initiatives such as banking hubs.
Offline bankers miss out on best rates
Banks have been accused of discriminating against people who do not use internet banking, with it found that more than three-quarters of the best easy access savings accounts cannot be opened in a branch. Analysis for the Telegraph by website Savings Champion shows that of 28 banks and building societies offering the highest rates in the past year, only six provided ways of managing the account offline, such as in person, or by postal or telephone banking. Four banks – Zopa, Tandem, Chase and Atom – required users to have access to a smartphone because the accounts were only available through an app, while Santander, Principality Building Society, Leeds Building Society and the Family Building Society offered lower rates to customers online than in branches. A spokesman for UK Finance said: “The range and rates of savings accounts offered is a commercial decision for individual firms and can be impacted by a number of factors including the business’ operating costs.”
Bankers’ fees fall as dealmaking declines
Investment bankers’ fees have been hit by a decline in dealmaking, with figures from London Stock Exchange owned data provider Refinitiv showing that fees from deals including takeovers, floats and debt sales have fallen to $3.2bn so far in 2022, from $5.6bn a year earlier. The biggest fall is in fees from equity capital markets deals, which are down by 82% to $217m. Fees for loans almost halved to $440m, while bond sales by UK companies generated about $773m, a 36% dip. Merger and acquisition fees fell by 22% to $1.8bn. There have been 148 equity capital market deals, raising about $7.2bn in proceeds so far this year, compared with $41.2bn from 273 transactions a year ago.
HBOS managers escape regulatory action after 6-year probe
The Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority have said no action will be taken against managers at HBOS, which went bankrupt in 2008 after years of excessive risk-taking and fraud. HBOS had to be rescued via a Government-engineered takeover by rival Lloyds, which subsequently needed a £20bn taxpayer bailout. The regulators opened investigations into certain unnamed former senior managers at HBOS in January 2016 to determine if any of them should be banned from the financial sector. The watchdogs have now determined that there are no grounds for action against former bosses.
Jupiter looks to sell Starling stake
Jupiter Fund Management is in talks to sell its entire stake in Starling Bank. Jupiter, which owns close to 10% of Starling's equity, has instructed bankers at Citi to find buyers for the holding. City sources say Jupiter’s stake in Starling is likely to be worth more than £200m, with the digital lender's valuation recently passing £2.5bn. The sale does not include the near-10% Starling shareholding owned by Chrysalis, the investment trust managed by Jupiter fund managers Richard Watts and Nick Williamson. Starling has opened nearly 3m accounts since launching its app in 2017, including more than 450,000 SME accounts, giving Starling a 7.5% share of the UK small business banking market.
Financial services firms risk shortages of compliance staff
Financial services firms could see shortages of compliance staff due to a surge in regulatory change. According to a research published by Thomson Reuters, 74% of financial services companies expect their regulatory burden to increase in the next year but 61% believe their teams will not grow in size. In the UK, 65% of businesses will not recruit additional compliance specialists. Those polled pointed to an increase in the cost of senior compliance staff and budgetary restraints among the reasons behind the potential shortages. Susannah Hammond, senior regulatory intelligence expert at Thomson Reuters, said: “Financial services firms face extremely high levels of regulatory activity yet headcount within compliance functions is expected to remain relatively flat.” “This means teams will be forced to pick up more work, putting them under considerable pressure,” she added.
LSE calls for post-Brexit overhaul of City rules
London Stock Exchange (LSE) chairman Michael Findlay has warned that London will lose its status as a global financial hub and be downgraded without a post-Brexit overhaul of City rules. In a submission to the Financial Conduct Authority’s (FCA) primary markets review, Mr Findlay said the UK has a “once-in-a-generation opportunity to implement radical reforms” to ensure London remains a relevant destination for flotations and capital raisings. He went on to warn that without this “essential modernisation”, London’s status as a global market runs a “material risk of diminishing to that of a regional exchange.” Mr Findlay’s submission, authored with Mark Austin, a partner at law firm Freshfields, said: “We are in a foot race with our competitors, and we cannot afford to be ignorant of that or complacent about what we need to do if we want to stay relevant.” Mr Findlay was writing in capacity as chairman of the Markets Practitioner Panel, while Mr Austin chairs the FCA’s Joint Listing Authority Advisory Panel.
Asset managers to offer fund tokens despite crypto turmoil
Asset managers are preparing to use the blockchain technology behind cryptocurrencies to break funds into bite-sized units, or tokens, to sell to small savers. Private markets investment firms Hamilton Lane and Partners Group have tokenised funds in the past year and said they were considering further products.
Affirm Holdings drops on negative forecast
US buy-now-pay-later lender Affirm Holdings saw its shares plunge 13% on Friday it said it expects full-year 2023 revenue to fall between $1.63bn and $1.73bn, below Wall Street views of $1.9bn. The fintech firm’s shares are down nearly 70% so far this year.
Misconduct could cost global banks dear over pension funds
New rules from the US Department of Labor could make it harder for asset managers to retain their “qualified professional asset manager” status if they are convicted of criminal wrongdoing abroad.
Moderna sues Pfizer/BioNTech for copying mRNA platform
Moderna is suing Pfizer and its German partner BioNTech for allegedly stealing its mRNA technology in the development of their Covid-19 vaccine.
House prices could slide 7% in the next two years, experts say
Experts say UK house prices could fall by 7% in the next two years as mortgage rates soar and the cost of living crisis gets worse. With the Office for National Statistics last week reporting a sharp drop in annual growth and Halifax data showing that prices fell for the first time in more than a year in July, analysts at Capital Economics have forecast a two-year downturn, with house prices falling by around 5% in 2023 and a further 2% in 2024. The experts believe demand will fall as buyers see budgets and confidence hit by rising mortgage rates, high inflation and a potential recession. Richard Donnell of property platform Zoopla said that if interest rates rise above 4%, “we would expect to see zero annual house price growth”, with “modest price falls” if rates increase further.
Amigo Loans founder invests in Hammerson
James Benamor, the founder of Amigo Loans, has acquired a £36m stake in Hammerson. Benamor’s family office, Richmond Group, has built a 3.03% stake in the shopping centres owner. Mr Benamor said he had begun buying shares in Hammerson as a “hedge against inflation” and praised the “strong progress” made under chief executive Rita-Rose Gagné.
London office sales surge
Employers are increasingly seeking new offices in central London, with take-up of space rebounding to pre-pandemic levels. Data shows that companies signed deals for 12.7m square feet of office property in central London in the 12 months to the end of June – with this marking a 153% increase on the same period last year. It was also 5% above the ten-year average. In the West End of London, take-up of office properties was up 24% on the ten-year average. Banks and finance companies took 1.4m square feet out of the total 4.9m square feet leased in the area in the 12-month-period.
Co-op to sell petrol forecourts division
The Co-op Group is in advanced negotiations to sell its petrol forecourts division for £450m as part of efforts to reduce debt and improve its balance sheet. Bankers at the investment bank Rothschild are understood to be advising the Co-op on a sale, which will see the mutual dispose of about 130 fuel retailing to a buyer that is already active in fuel retailing.
Goldman issues recession warning
Britain will go into recession before the end of this year and the economy will keep contracting throughout 2023, Goldman Sachs has warned. The investment bank believes that the economy will have shrunk for two consecutive quarters by the end of 2022. It has also revised previous estimates that the economy will grow by 1.1% next year, instead forecasting that it will contract by 0.6% through 2023. Economists at Goldman said that "concerns around cost of living pressures in the UK have continued to intensify on the back of the worsening energy crisis. Real consumption is still likely to decline significantly."
Services sector optimism slumps - CBI
A Confederation of British Industry (CBI) poll shows that optimism in the services sector, which makes up 80% of the economy, has plummeted as cost pressures increase. The survey of 199 firms found that increased costs have hit profits and led to investment spending being cut back. CBI data shows that output for business and professional services firms was flat over the summer and is expected to “fall sharply” over the next three months. In the three months to August the services sector saw cost pressures and average prices rising at record rates, with this driving the fall in business confidence.
1 in 3 over 55s are struggling financially
More than two-fifths of 55 to 64-year-olds are struggling financially, according to research by insurer Aviva, while more than a third of all over-55s said they are having difficulties with money. The research found that for over-55s, most believe they would need more than £257 per month extra to feel financially secure. This rises to £310 a month amongst 55-64 year olds.