BoE: £1.5bn repaid while mortgage lending hits 13-year high
Bank of England (BoE) figures reveal households repaid just over £1.5bn of credit card debt, personal loans and car finance in November, with weaker consumer spending amid the second national lockdown believed to be a contributing factor. With net consumer lending dropping by £1.54bn, it marks a 6.7% decline on the amount recorded November 2019, with this the biggest drop since monthly records began in 1994. Since the start of the coronavirus pandemic in March, households have repaid £17.3bn of consumer credit. BoE analysis also shows that total household deposits increased by almost £5bn month-on-month to reach £17.6bn. Separate BoE data shows that mortgage approvals hit the highest level in 13 years in November, with 104,969 approved. This was up on the 98,338 recorded in October and marks the biggest total since August 2007. The surge has been attributed in part to the stamp duty holiday rolled out to boost the market after it was hit by the coronavirus outbreak and resulting restrictions, with the temporary relief on the levy driving activity and boosting prices. Figures from building society Nationwide show that house prices rose by 7.3% in December, marking the biggest annual increase in six years.
Moneyfacts data shows dip in 90% deals
Figures released by comparison site Moneyfacts show that there are currently 160 deals available for home buyers with a 10% deposit, down from 779 at the start of the coronavirus pandemic. Despite the decline, experts believe lenders are staring to return to the 10% deposit market, with David Hollingworth of L&C Mortgages saying: “Numerous high street lenders have now launched deals into the 90% market with the likes of Halifax, Barclays and NatWest all returning. That should encourage other lenders to come back.” Increased competition could also see rates come down, suggests Chris Sykes, mortgage consultant at Private Finance, who comments: “With major lenders such as Nationwide and TSB beginning to make cuts, we expect others to follow as lenders pitch for business.”
Bailey and Horta-Osorio to face MPs over HBOS scandal
Bank of England governor Andrew Bailey and Lloyds’ Antonio Horta-Osorio are to be quizzed by MPs over the aftermath of the HBOS Reading scandal. Mr Bailey, who was chief executive of the Financial Conduct Authority (FCA) when the fraud was uncovered, will face the Commons’ Treasury Committee over the scandal which saw bankers and advisers defraud business customers. Mr Horta-Osorio, CEO of HBOS's owner Lloyds, will also face MPs and is the subject of a formal complaint from the All Party Parliamentary Group on Fair Business Banking, which wrote to the FCA regarding his conduct.
PSA and Fiat shareholders approve merger
Shareholders in Peugeot-owner PSA and Fiat Chrysler have approved the merger of the two firms, a deal which will create the world’s fourth-largest auto firm. The $52bn deal, which was first agreed back in 2019, is in its final stages, with a completion date due to be set when both firm’s shareholders have signed it off. The new entity, called Stellantis, will comprise 14 different brands.
€6bn of share trading shifts to EU
Almost €6bn of EU share dealing shifted away from London to facilities in European capitals on the first day of post-Brexit trading yesterday. Data from Refinitiv shows trading in equities such as Spain's Santander and Germany's Deutsche Bank - listed in the bloc - moved to European marketplaces and stock exchanges including Paris and Frankfurt. The volume made up a sixth of all business on exchanges in Europe. Alasdair Haynes, chief executive of Aquis Exchange, commented: "It's been an extraordinary day. Shifting liquidity is one of the hardest things to do. It's not 'Big Bang' - it's 'Bang and It's Gone'. The City has lost its European share business." The Financial Conduct Authority said it “continues to view the agreement of mutual equivalence between the UK and EU as the best way to avoid disruption for market participants and avoid fragmentation of liquidity in DTO products.” The City watchdog added that it will consider by March 31 “whether market or regulatory developments warrant a review of our approach.”
Investors call for listings reforms
Sky News reports that the Investment Association (IA) wants the London Stock Exchange to retain a "one-share, one-vote" structure to maintain shareholder protections. The investor body, whose members collectively manage £8.5trn in assets, believes regulators should look to rebrand the standard listing category to remove any reputational disincentive for companies to use it. The IA will also reportedly suggest an acceleration of the initial public offering process, arguing that this could be delivered via more effective use of digital technology. The IA's recommendations will be submitted to a review led by Treasury non-executive director Lord Hill.
Natixis to sell its stake in H2O
Natixis’ majority stake in H2O will be sold back to the asset manager, as part of a new cost-cutting strategy by new Natixis chief executive Nicolas Namias.
LEISURE AND HOSPITALITY
Restaurant industry job losses jump by 163%
Almost 30,000 job losses were recorded across restaurants and casual dining firms in 2020, with the coronavirus crisis driving a 163% jump in job cuts as restrictions designed to fight the spread of the virus hit the sector. Figures compiled by the Centre for Retail Research show that 29,684 jobs were lost, far exceeding the 11,280 job losses reported across the sector in 2019. The report also shows that branch closures by hospitality firms hit 1,621 – a 75.8% jump on the 922 closures recorded in 2019.
Ladbrokes owner rebuffs US suitor
Entain, owner of Ladbrokes and Coral, has received and rejected an approach from US casino operator MGM Resorts which saw the business valued at £8.1bn. Entain reportedly informed the suitor that “it believes that the proposal significantly undervalues the company and its prospects,” and is seeking additional information regarding the strategic rationale for a tie-up. This comes after US casino firm Caesars Entertainment agreed to buy William Hill for £2.9bn.
Factories hold record stockpiles
Factories accumulated record supplies of materials last month as manufacturers boosted purchases of supplies at the fastest pace in over 25 years, the IHS Markit/CIPS manufacturing purchasing managers’ index reveals. The index rose to 57.5, up from 55.6 the previous month to its highest level since November 2017. Manufacturers built up their stocks at the fastest rate since March 2019 ahead of the end of the Brexit transition period, while new orders rose at the quickest pace since August.
MEDIA AND ENTERTAINMENT
S4Capital acquires ad agencies
Sir Martin Sorrell’s S4Capital has acquired advertising agencies Decoded and Metric Theory in two new deals worth $200m.
Hipgnosis in further rights acquisition
Hipgnosis has acquired the rights to over 250 songs from record producer Jimmy Iovine, co-founder of Beats headphones. Hipgnosis founder Merck Mecuriadis said it raised £190m in September to continue buying music rights after spending over £800m on more than 13,000 songs.
Retail visits decline
Analysis from market researcher Springboard shows that the number of shoppers visiting stores, shopping centres and other outlets across the UK was down 23.3% in the seven days after Christmas compared with the week before. London was the only place where footfall rose, with the capital recording a 2.5% increase in visitor numbers in the week to January 2. As more regions were moved into Tier 4 coronavirus restrictions, shopping centres took the biggest hit, with footfall down 32%.
Wolseley sold for £308m
Ferguson’s plumbing supplies division Wolseley UK is to be sold to Clayton, Dubilier & Rice in a deal worth £308m.
OECD warns governments to rethink constraints on public spending
OECD chief economist Laurence Boone has urged governments to use fiscal policy - increased public spending and lower taxes - to help drive the post-pandemic economic recovery.