BANKING
Barclays announces branch closures
Barclays has announced it is closing 27 branches, bringing the total number of sites shutting their doors this year to 103. A spokesperson said: “We continue to review and adjust our branch footprint to ensure it reflects the way that our customers are increasingly choosing to do their banking.” Analysis by consumer group Which? shows that between them, 10 of the largest banks in the UK are going to close 486 branches this year. Barclays has already closed 63 and is set to close 40 more, while HSBC has shut one and will close 69 more. Lloyds, which includes Lloyds Bank, Halifax and Bank of Scotland, has shut 47 and will close 88. NatWest, which includes Royal Bank of Scotland, has closed 31 and is scheduled to close 24. TSB has closed 39 and will shut 31 more, while Virgin Money has shut 29 and is set to close one more. Nationwide will close three branches having already shut four, Danske Bank is set to close four, Metro Bank will shut three and Ulster Bank will close nine. Santander will not close any branches, but will reduce opening hours. Figures show that Britain lost nearly 5,000 high street banks between 2012 and 2021.
INTERNATIONAL
Wall Street banks made $2.3bn betting on rising inflation in 2021
Wall Street banks made $2.3bn by betting on rising inflation in 2021, more than twice what they made the year before. Research by Vali Analytics shows Goldman Sachs pulled in $450m, while JPMorgan Chase made $300m. Barclays and Morgan Stanley also recorded strong gains in a market where traders make their money by trading inflation-linked bonds that payout in relation to the current Consumer Price Index. Former inflation trader Lindsay Politi, now of One River Asset Management, says: “Most market observers have been expecting inflation to revert back to normal levels for over a year now and that hasn't played out … Interest in inflation markets has grown beyond anything we've seen in the past 10 years, and we believe we are just getting started.”
AUTOMOTIVE
Pendragon criticised over 'excessive' bonuses
Bosses at Pendragon, Britain's second biggest car dealer, have been accused of taking "unwarranted" bonuses. Hedin Group, Pendragon's top shareholder with a 27.1% stake, says it will vote against the firm’s executive pay policy and the reappointment of Mike Wright, the chairman of its remuneration committee. This comes after the firm handed chief executive William Berman a pay packet worth £3.4m last year. Hedin said this was “excessive and unwarranted,” noting that the large bonuses came despite Pendragon opting not to pay back £64m in pandemic-related Government support. Shareholder advisory firm Glass Lewis has recommended shareholders oppose the rewards handed to executives, claiming the sums were “inappropriate.”
CONSTRUCTION
Investor launches £1.5bn bid for affordable housebuilder
American hedge fund Inclusive Capital Partners, also known as In-Cap, is launching a £1.5bn bid to take over housebuilder Countryside Partnerships, which works alongside local authorities and housing associations to develop affordable housing. In-Cap, which describes itself as a social investment company, says that despite "working with government agencies and housing authorities to rebuild communities and provide this social imperative of affordable quality homes", Countryside has "struggled" as a public company and could perform better as a private company with an owner-operator board.
FINANCIAL SERVICES
Pimfa: FCA should be able to direct Ofcom to act on scam ads
Pimfa believes the Financial Conduct Authority (FCA) should be given the power to direct Ofcom to act over potentially fraudulent online adverts. Tim Fassam, Pimfa’s director of government relations and policy, told an evidence session to MPs around the online safety bill that the City watchdog should have the authority to act over fraudulent user generated content that appears on search engines and social media platforms. A Department for Digital, Culture, Media and Sport spokesperson commented: “The scope of the online safety bill requires Ofcom to rely on their strong relationships with other regulators, including the expertise of the FCA.”
Many City firms lack an ESG policy
Research from Clearwater Analytics reveals 45% of asset managers, pension funds and insurers still do not have ESG investment policies in place. A poll of over 190 institutional investment firms found that a third of those without a clear strategy cited the lack of available and credible data to evaluate investments on an ESG basis, compared with just 16.5% who blamed lower returns. Gayatri Raman, president of Europe and Asia at Clearwater Analytics, said: “Before anyone can incorporate ESG factors into their investing strategies, data needs to be highly available, high quality, and easy to track. Only then will investors be able to fully integrate these initiatives into their investment process.”
Activist investor exits Generali’s board
Italian billionaire Francesco Gaetano Caltagirone has stepped down from the board of insurance firm Generali. This comes after the collapse of his drive to oust the insurer’s management team. He had put forward a shareholder resolution to block incumbent chief executive Philippe Donnet from taking on a third term leading the firm. Mr Caltagirone, Generali’s second biggest shareholder, formed a pact with the firm’s third-biggest shareholder, Leonardo Del Vecchio, in an effort to battle the insurer’s biggest shareholder, Mediobanca, and oust Generali’s CEO. However, 56% of shareholders voted to keep Mr Donnet on board at Generali’s AGM.
LEISURE & HOSPITALITY
Camra calls for VAT cut for pubs
The Campaign for Real Ale (Camra) has called on ministers to implement an immediate VAT cut on food and drink served in pubs in order to save businesses. This comes as research by the campaign group found that 290 UK pubs were either demolished or converted for another purpose last year, amid the impact of the COVID pandemic and the cost-of-living crisis. Camra also called for an online sales tax, with money collected used to relieve the "grossly unfair" burden on hospitality of business rates.
REAL ESTATE
Average house price passes £250k
The average price of a UK home has risen above £250,000 for the first time, according to Zoopla, hitting £250,200 in April. Despite hitting the milestone, the pace of price growth is slowing, with annual house price inflation down from 9% in March to 8.4% in April. Zoopla expects the rate to fall to 3% by the end of the year.
RETAIL
High street hit as footfall declines
High streets and shopping centres are feeling the impact of the cost of living crisis with analysis by Ipsos showing that the number of shopping visits was down more than 20% last week compared to the same period in 2019. Susannah Streeter, senior investments and markets analyst at Hargreaves Lansdown, said: “The high street is really beginning to feel the heat from red hot prices with bills mounting all over the place.” Ruth Gregory, senior UK economist as Capital Economics, commented: “Cost of living pressures will continue to intensify and may take some time to feed through to retail sales,” adding: “Household savings built up during the pandemic and a tight labour market mean that low consumer confidence hasn’t weighed on sales as much as it has at times in the past.”
CMA launches probe into McColl's acquisition
The Competition and Markets Authority (CMA) has ordered Morrisons to keep McColl's independent, as the mergers regulator investigates the deal. The supermarket chain rescued the loss-making convenience store chain from administration for £182m earlier this month. The CMA said it had "reasonable grounds" to suspect some of their assets may be too similar and that this could leave shoppers worse off. However, it added that it was working with Morrisons to ensure the supermarket can support the struggling McColl's.
Missguided collapses into administration
Fast fashion chain Missguided has collapsed into administration, with supply chain costs and weakening consumer confidence hitting the business. Administrators said there was “a high level of interest from a number of strategic buyers,” with rival Boohoo said to be interested in snapping up the brand.
ECONOMY
Labour urges OBR to assess £21bn cost of living package
Labour has called for an independent assessment of whether Chancellor Rishi Sunak’s £21bn cost of living emergency package could cause inflation to rise. Pat McFadden, shadow chief secretary to the Treasury, has written to Office for Budget Responsibility (OBR) chair, Richard Hughes, asking for the spending watchdog to analyse the impact of the measures and “provide authoritative and independent economic and fiscal projections.” Mr McFadden has called for an assessment of the measures on public sector expenditure, receipts and net borrowing, as well as gross domestic product and investment.
Inflation expectations remain high
A poll by YouGov and US bank Citi shows that the British public expect inflation of 6.1% over the next 12 months, with this up from 6% in April and equal to the record high seen in March. Expectations for inflation in five to 10 years’ time held at 4.2% in May, unchanged from April. Citi economist Benjamin Nabarro said the Bank of England is likely to remain concerned about medium-term inflation expectations but suggested there was little in the data that should provide a further impetus for an “out-sized” half percentage-point interest rate increase.
OTHER
Corporate confidence rises
Businesses are increasingly confident that they can use high inflation to rebuild their margins, the monthly barometer by Lloyds Bank has found. Confidence among firms has risen by five points on the index to reach 38%, significantly higher than the long-term average of 28%. This marks the first increase since Russia launched its invasion of Ukraine. Six in ten of the 1,200 companies surveyed said that they plan to increase prices to protect profit margins in light of the rising cost of supplies. It was also shown that 53% plan to take on staff, up from 44% in the previous month.
SMEs fear long-term fallout from cost of living crisis
Three-quarters of SMEs are worried about the long-term impact the cost of living crisis, soaring energy bills and rising inflation. Barclays’ SME Barometer, a quarterly survey of business sentiment, saw 51% say they were concerned that surging prices would dent consumer spending, while more than a quarter said they feared that having to increase their own prices in response would make them less competitive. Meanwhile, data from Barclaycard Payments shows that the volume of debit and credit card payments processed to SMEs rose in Q1, with a 20% increase in value and a 35% increase in volume between January and March compared with pre-pandemic levels.