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Daily News Roundup: Tuesday, 30th March 2021

Posted: 30th March 2021

BANKING

Warnings make it hard to justify reimbursing bargain hunters

Karen Baxter at UK Finance has told the Telegraph that people need to take responsibility to avoid falling for scams when searching out bargains online. The former economic crime commander at the City of London Police said the money lost to fraud ended up in the hands of criminal gangs. Ms Baxter added that it was hard to justify reimbursing people who have had ample warnings from banks, told to apply some due diligence, but go ahead willingly just to get a bargain. “There are no bargains. There are simply no bargains,” she stressed. Her comments come as MPs criticise tech platforms for hosting investment scams, and Ms Baxter believes economic crime should be included in the scope of the forthcoming Online Safety Bill. Google has defended its actions saying it had been working closely with the Financial Conduct Authority and has strict policies on the type of advertisements allowed on its platform, which were vigorously enforced.

Bank of England advises on financial services jobs relocation

Following reports in the FT that UK banks have been advised by the Bank of England to seek its approval before relocating UK jobs or operations abroad, insiders have told the Telegraph that the matter was currently being discussed informally with the central bank, adding that there was an "increasing focus on how and where banks are booking trades, and why". Officials are reportedly concerned that requests for relocations from the European Central Bank have been excessive and beyond what is required for financial stability. The paper suggests the move could exacerbate tensions with Brussels just a week after the UK and EU agreed the terms of a MoU for future cooperation on financial services.

UK bank lending leapt by £29.3bn since March

A new study shows UK banks have lent around £29.3bn more to businesses over the past year - a rise of 8% since the start of the pandemic. This compares with a 5.3% jump in lending in the EU on average. UK bank lending also surpassed Germany (7%) and Spain (3%). “It is in banks’ collective interest to continue to support viable, productive businesses, rather than seek to defend capital ratios by cutting lending, which would have an adverse effect on the economy and therefore could have an even greater negative effect on banks’ capital ratios,” the Bank of England said.

Bad Archegos bets trigger talk of regulation

Commenting on the collapse of Archegos Capital Management and its impact on its lenders, Alex Brazier, the Bank of England's executive director for financial stability strategy and risk, says there may be a need for “guardrails” to prevent the wider market being affected by debt-fuelled bets. He warned: "We've been reminded, if it were needed, that the non-bank system and the banking system are not too hermetically sealed separate things. What happens in one affects the other." Regarding Brexit, Mr Brazier added that the UK should not be a rule-taker just to try and keep business in the City. "Have a bit of confidence, don't try and take measures to just keep business here, but let's stay committed to an open, global financial system," Brazier told a Reuters Newsmaker forum.

Stamp duty holiday drives mortgage lending to five-year high

New Bank of England data show that the stamp duty holiday extension spurred home buyers to borrow £6.2bn last month – a five-year high for mortgage lending. Some 87,700 mortgages were approved in February, down from more than 100,000 in November and December, but still one of the highest numbers since 2007. “We suspect that mortgage lending will remain high this year given the extension to the stamp duty holiday and the strength of the survey data,” said Andrew Wishart at Capital Economics. “As a result, mortgage approvals for house purchase are likely to reach their highest level since 2007 this year.”

Keep big banks away from open banking reforms, says Tide boss

Digital lender Tide has told the Competition and Markets Authority that big banks should not be allowed to control open banking reforms with its CEO Oliver Prill saying large lenders were partly responsible for a slow take-up of open banking. The comments formed part of a submission to the CMA which had opened up a consultation on the issue.

INTERNATIONAL

Share sell-off to result in major losses for Credit Suisse and Nomura

Nomura and Credit Suisse have said they are expecting significant losses in the wake of a fire sale of an estimated $20bn (£14.5bn) worth of stocks after Archegos Capital Management reportedly defaulted on margin calls. Credit Suisse stated: “Following the failure of the fund to meet these margin commitments, Credit Suisse and a number of other banks are in the process of exiting these positions. While at this time it is premature to quantify the exact size of the loss resulting from this exit, it could be highly significant and material to our first-quarter results.” Goldman Sachs and Morgan Stanley spotted problems towards the end of last week and sold affected holdings. Bill Blain, of Shard Capital, said the Archegos failure showed that measures after the financial crisis had merely moved risk, not eradicated it. "Rather than banks taking positions, that leverage has been pushed into the unregulated shadow banking world. Archegos will have been egged on by the investment banks that wanted to sell it products and leverage," he said.

Deutsche Bank extends CEO Sewing’s contract to 2026

Christian Sewing, the CEO of Deutsche Bank, has had his contract extended for a further five years so he can continue with the lender’s radical restructuring. Additionally, Sewing will hand over oversight of the investment and corporate bank to board member Fabrizio Campelli, the German bank said yesterday.

AUTOMOTIVE

Cazoo to list in US

Online car dealer Cazoo has announced that it is raising $1bn for a US stock market listing. The UK-based firm’s founder Alex Chesterman commented: “The UK is an amazing place to build a business but the IPO process is challenging for companies investing in high growth. It is just better understood by investors in the US.” Mr Chesterman noted that the funds raised in the IPO would lead the firm to profitability.

AVIATION

Carlyle to buy aircraft leasing firm

Carlyle Aviation Partners, the aviation investment arm of private equity firm Carlyle Group, will buy aircraft leasing company Fly Leasing Ltd for an enterprise value of $2.36bn

Southwest Airlines keeps faith in Boeing

Southwest Airlines has confirmed an order for 100 Boeing 737 Max jets, sending the aircraft maker’s shares up by 2.3%.

FINANCIAL SERVICES

AJ Bell set to top revenue expectations

AJ Bell expects to surpass revenue forecasts for the current financial year by at least £6m. The firm expects revenues in the year to September 30 to exceed the current market consensus estimate of £136m. AJ Bell has had a bumper pandemic, with revenues last year climbing by 21% to £127m, while its pre-tax profits grew by 29% to £48.6m as it attracted a record amount of new customers during lockdown.

LME’s status at risk over Ring closure plans

The CEO of Marex Spectron has warned that a plan by the London Metal Exchange to abandon its trading floor could leave it indistinguishable from rivals such as CME and put its status as the leading price-setting venue in the global metals market at risk. Ian Lowitt’s comments add to a growing backlash against the LME’s plan to close The Ring - the last open outcry market in Europe - in favour of electronic pricing.

Investment trusts tap reserves for record dividends

Dividend payouts to shareholders by London-listed main market trusts rose by 4.2%, or £87m, compared with 2019, to hit a record £1.88bn. Analysis by Link Group suggests investment trusts dug into their reserves to boost payouts while other UK-listed companies slashed dividends.

Letter: Regulation must not hamper fintech growth

Charlotte Crosswell, the CEO of Innovate Finance, says the decision by the Competition and Markets Authority to block the merger of Crowdcube and Seedrs is short-sighted and risks hampering innovation.

HEALTHCARE

UK signs deal with GSK to finish and fill Novavax vaccine

The UK Government has signed a deal with GlaxoSmithKline for the drugmaker to "fill and finish" 60m doses of a coronavirus vaccine from US firm Novavax at its Barnard Castle factory in the North East. The move avoids the doses being transported to Germany to be put into vials there. The move further boosts the UK’s onshore vaccine production and helps Britain sidestep any potential vaccine export ban by a third country.

Financial Times The Daily Telegraph The Guardian, Page: 4

Pfizer takes BioNTech’s gene-based research and runs

Pfizer has said it plans to use the knowledge gained through its partnership with BioNTech in the COVID-19 vaccine development to tackle other diseases with gene-based therapies. The US drugs giant said it would no longer need to partner with the German biotech company after developing its own expertise.

LEISURE & HOSPITALITY

Deliveroo slashes valuation by £1bn as City turns back on IPO

Deliveroo has cut its target valuation by £950m after City investors shunned the takeaway firm’s upcoming IPO amid concerns about its treatment of drivers and the control being retained by founder Will Shu. M&G, Aviva Investors, Aberdeen Standard and Legal and General are among those to have raised issues relating to Deliveroo’s business model.

Domino's Icelandic business acquired by consortium

Domino’s Icelandic division is to be sold to a consortium of investors in a deal worth £14m. This comes after the division reported underlying operating profit for the year ended 27 December 2020 of ISK 101.2m (£600,000), with the value of its gross assets ISK 3.822bn (£22.1m).

MANUFACTURING

Massive order helps JCB dig its way out of pandemic

The British division of the FTSE 100 plant hire group Ashtead has ordered 2,100 construction industry machines from JCB enabling the British company to reverse the 1,500 job cuts ordered last year. The £65m order from Sunbelt Rentals is for equipment including excavators, dumper trucks and fork lifts.

MEDIA & ENTERTAINMENT

Ten Entertainment reports results

Leisure operator Ten Entertainment has reported a £17.7m post-tax loss for 2020, compared to a profit of £9m the previous year. Sales were down 57% to £36.3m.

PROFESSIONAL SERVICES

French technology consultancy hires 1,500 more across Britain

Capgemini has announced that it will create 1,500 new jobs in Glasgow, Inverness, Worthing, Manchester, Liverpool and Pontypridd with the roles expected to be in digital and technology solutions, project management and cybersecurity. Capgemini currently has a 8,800-strong workforce across over 16 locations in the UK.

REAL ESTATE

Segro and Barratt work on Hayes factory site

Segro has begun the redevelopment of part of a former Nestle chocolate and coffee facility in west London, with four warehouse properties totalling 239,665 square feet planned for the site. Meanwhile builder Barratt is contracted to deliver more than 1,300 new homes there.

Grocery assets acquired by property investor

Property investor LXi Reit has announced seven acquisitions in the grocery sector, with the deals totalling £85m.

ECONOMY

Optimism about household finances rises

The Scottish Widows Household Finance Index rose from 41.1 to 42 in the first three months of the year, encouraged by the success of the vaccination programme and the “road map” out of lockdown. The survey, conducted with IHS Markit, found people are feeling the most secure in their jobs since the start of the pandemic and have paid off debts at the fastest rate in more than a decade.

OTHER

Cameron faces probe into links with Greensill at heart of government

The Committee on Standards in Public Life is to consider a probe into former UK prime minister David Cameron after reports he gave broad government access to Australian financier Lex Greensill.

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