BANKING
Banks urged to take action on savings rates
The chief executives of the UK’s four biggest banks will meet with the Financial Conduct Authority (FCA) to address concerns that savings rates are not rising as fast as mortgages. This comes with the Treasury Committee having written to HSBC, Barclays, Lloyds and NatWest to voice concern that savings rates remain too low, with committee member Angela Eagle accusing lenders of “blatant profiteering.” Committee chair Harriet Baldwin highlighted that while the Bank of England’s base rate has risen to 5%, the big four banks offer rates between 0.9% and 1.75%. Commenting on the matter, Ms Baldwin said it is “only right that the UK’s biggest banks step up their measly easy access savings rates,” adding that “the time for action is now.” She also noted that the Consumer Duty, which comes into force at the end of this month, will ask firms to “explain and justify their pricing decisions,” including on savings rates. The Committee has also written to the FCA, asking the watchdog how it will measure fair value in pricing decisions once the Consumer Duty is in force.
Lenders warned over account closures
The Government says it will take action against banks accused of blacklisting customers because of their views, with Chancellor Jeremy Hunt asking City Minister Andrew Griffith to investigate cases where lenders closed the accounts of individuals or companies whose beliefs they disagree with. Mr Griffith has said it would be a concern if financial services "were being denied to those exercising the right to lawful free speech.” This comes after Brexiteer Nigel Farage accused banks of “serious political persecution" after his accounts were closed. Culture Secretary Lucy Frazer has voiced concern that “accounts might be closed for the wrong reasons” and urged banks to carefully consider the issue. She told LBC: "Banks are regulated, and those are the sort of things regulators should consider." Security Minister Tom Tugendhat noted that rules on “politically exposed persons” are in place “to prevent the corrupt use of banking facilities by politicians in corrupt regimes,” not to “silence individuals who may hold views with which we may or may not agree." UK Finance said lenders should discuss the closure of an account with a customer "so far as is feasible and permissible."
Most banks signed up to Stonewall schemes
The majority of High Street banks are members of diversity schemes run by the Stonewall, despite concerns that have seen organisations including the BBC, Channel 4, the Cabinet Office, and the Department of Health stop working with the charity. HSBC is the top-ranking bank in Stonewall’s annual Equality Index, while NatWest is linked to the charity. Barclays and Nationwide are among Stonewall’s top 100 employers, while Santander is also member of the index and TSB is a member of the Diversity Champions Scheme. Lloyds Banking Group, which runs Lloyds, Halifax and Bank of Scotland branches, was previously named as the country’s top employer by Stonewall.
PRIVATE EQUITY
Blackstone REIT sees redemption requests decline
Blackstone Real Estate Income Trust (BREIT) saw redemption requests decline in June after turmoil that led to the private equity firm limiting investor withdrawals. BREIT received $3.8bn in requests in June, with this 29% lower than the peak seen in January and marks the lowest month of repurchase requests this year, the firm said in a letter to investors.
INTERNATIONAL
BoA in Fed talks on stress test results
Bank of America says it has entered a dialogue with the Federal Reserve to understand differing results of the central bank's stress test and the company's own under the Dodd-Frank Act. The bank said it wants to understand the differences in a category called "other comprehensive income" during a nine-quarter period measured in the tests.
Deutsche Bank completes Postbank tech integration
Deutsche Bank has completed the final phase of a technology integration process with Postbank. Germany's largest bank began acquiring Postbank in 2008, during the global financial crisis, but has struggled to complete its integration. Deutsche will now begin to decommission Postbank hardware and software. It says the integration will result in cost savings in 2023 and 2024, with annual savings of €300m from 2025.
HSBC set to hire Credit Suisse’s Qatar team in blow to UBS
HSBC is reportedly in talks to poach a team of senior wealth managers from Credit Suisse in Qatar, dealing a blow to UBS, which recently completed the takeover of its Swiss rival.
FINANCIAL SERVICES
FCA to crack down on insurers
The Financial Conduct Authority (FCA) will target home and car insurers that have failed to improve their treatment of struggling customers, saying that firms are taking a long time to deal with complaints and that customers have not been given appropriate settlements. Commenting on a review of the sector, the watchdog said it discovered instances of motor insurance customers being offered a price lower than their car’s fair market value after it had been written off, which is against FCA rules.” The statement added that the FCA is “taking action against those firms who may have broken our rules.” The regulator noted that it has told individual companies to address poor practice and provide redress where necessary, highlighting that “firms are aware that we have a full range of regulatory tools at our disposal if necessary remedial action is not undertaken.”
MANUFACTURING
Factories fall further into recession territory
Britain’s factories have recorded negative growth as domestic and foreign buyers reduce spending amid ongoing economic uncertainty. The S&P Global/CIPS UK Manufacturing PMI slipped to 46.5 in June from 47.1 in May on an index where a reading above 50 represents growth. June’s data means the sector has been in negative growth territory for 11 consecutive months. Rob Dobson, director at S&P Global Market Intelligence, said: “Producers are being hit by weak domestic and export market conditions with clients showing a greater reluctance to commit to spending due to market uncertainty, increased competition and elevated costs.” The PMI shows that employment fell for the ninth month in a row amid “weaker demand, redundancies and cost management initiatives.” Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The downturn in the manufacturing sector is showing no signs of slowing, even as it enters its third year.”
REAL ESTATE
Vacant office space nears record high
Analysis shows that around 105m sq ft of UK office space is currently vacant. This is an increase of 68% on the pre-pandemic level recorded in early 2020, pointing in part to the impact of the shift toward remote and hybrid working brought about by the Covid lockdowns. The national office vacancy rate is 7.6%, compared with 4.6% in March 2020.
RETAIL
Retailers told to publish live fuel prices
Fuel retailers will be forced to publish live prices as part of a scheme aimed at tackling overcharging, which will also see the creation of a fuel monitor oversight body that will scrutinise prices. Energy Security Secretary Grant Shapps said officials “will shine a light on rip-off retailers to drive down prices and make sure they're held to account by putting into law new powers to increase transparency.” The new rules mean drivers will be able to compare up-to-date prices online so they can find the cheapest option. The Competition and Markets Authority has been investigating the UK fuel market following concerns that falling wholesale prices are not being passed on to consumers. Sarah Cardell, chief executive at the competition watchdog, said: ”We've seen retail margins increase over the last few years. And that means that motorists are paying more at the pump than they would be if competition was working really well."
ECONOMY
Economists: Triple lock will ‘make inflation worse’
Economists have voiced concern over the Prime Minister’s commitment to ensuring that state pension payments increase in line with the highest of inflation, wage growth or 2.5%, saying the triple lock policy could drive inflation even higher. Soaring inflation means the state pension increased by a record high of 10.1% in April and forecasts suggest next year could see a further 7% increase. It this does occur, pension provider Canada Life estimates that it will cost the Treasury an extra £17bn over just two years. Jonathan Cribb of the Institute for Fiscal Studies said that if maintaining the triple lock is financed by borrowing, “then it is likely to be inflationary.” He added: “The Government would have to raise taxes and cut spending in order for it not to be so.” David Willetts, chairman of the Resolution Foundation think-tank, said keeping the triple lock is unsustainable.
Public back focus on inflation fight over tax cuts
A poll of 1,500 voters for the i suggests that people believe the Government is right to focus on bringing down inflation rather than reducing taxes. While 28% of respondents said the Government should focus on curbing inflation even if this meant tax rises elsewhere, just 12% wanted tax cuts even if it fuelled inflation. However, just 17% backed an increase in income tax to reduce inflation, while 48% opposed a hike. On the level of taxes they face, 46% feel they are paying too much and just 8% felt their own tax bills were too low. Chancellor Jeremy Hunt has argued that the best path to putting money back in people’s pockets is by halving the rate of inflation, rather than through tax cuts. Some MPs within his own party disagree, however, saying the tax burden is too high and arguing that lower taxes will boost the economy.
OTHER
Ofgem in energy firm finance warning
Sector regulator Ofgem says a number of energy companies do not meet its financial resilience standards. While it did not specify which companies were falling short of its standards, it warned that around “a third of the market is below the target.” The watchdog has written to energy companies warning them that an expected return to profitability must be used to bolster their balance sheets. Ofgem chief executive Jonathan Brearley noted that some suppliers were “not yet sufficiently well capitalised,” adding that those not yet meeting new capital requirements are expected “to retain profits rather than pay out dividends.”