BANKING
Banks leave buffers untouched
Britain’s banks have opted against dipping into their capital buffers to lend to customers during the pandemic, despite the Bank of England having suggested they were clear to do so to support the economy and businesses, as well as keep defaults down. The Times says an increase in capital seen by banks is partly down to the freeze on dividend payments imposed by the Bank of England, but notes that it also reflects a reluctance to dip into buffers, with banking bosses concerned over investor reaction and how long regulators would give them to rebuild the pile. It is noted that the Bank of England last year rolled out several measures to help banks address the impact of the pandemic, including cutting the countercyclical buffer to zero, releasing £23bn, while the Prudential Regulation Authority said “all elements of the substantial capital and liquidity buffers that have been built up by banks exist to be used as necessary to support the economy”.
APPG chair criticises pay for building society bosses
MP Gareth Thomas, chairman of the All-Party Parliamentary Group for Mutuals, has criticised building societies for awarding chief executives large bonuses last year while the country was in lockdown. This came as Mail on Sunday research revealed that 23 building society bosses received bonuses last year, ranging from £3,000 to £226,000. The study shows that the bosses of 11 societies received no bonuses. Building Societies Members Association spokesman Ted Fisher commented: “Many building societies seem to be in the race to the bottom of the league for savings rates while the directors seem to be in a race to the top for pay increases.”
Buyout firms eye Co-op stake
Private equity investors JC Flowers and Bain Capital Credit are in advanced talks to acquire the roughly 10% shareholding in Co-operative Bank held by hedge fund BlueMountain Capital. Co-operative Bank received a takeover approach from Cerberus Capital Management in late 2020 but discussions failed to progress. Sky News says many analysts and industry executives believe consolidation of Britain's mid-tier banking sector is long overdue. It notes that Sainsbury's has put its banking unit up for sale, while TSB owner Sabadell has signalled that a future auction for the lender is likely.
Banks admit to refusing mortgages for furloughed workers
High Street banks have admitted to rejecting mortgage and remortgage applications from people who were furloughed in the month prior to their application. Banks including NatWest, Nationwide and Lloyds have faced criticism over the move and calls are mounting for the Treasury to investigate. MP Clive Lewis is calling for the Government to step in and prevent furloughed workers being refused loans. He said it was a cynical attempt by the banks to protect their profits and would be of great concern to people looking to remortgage due to financial difficulties suffered as a result of the pandemic.
Buying now costs less than renting
First-time buyers are now saving more than £800 a year in comparison with tenants, analysis suggests. The monthly cost of renting has risen by 10% to £821 in the past year, according to Halifax. The average monthly cost of repaying a mortgage for a first-time buyer has risen by 1% to £753 during the same period. First-time buyers needed to find an average deposit of £58,986 but benefited from low interest rates, which contributed to a slower rise in monthly mortgage payments than in rents.
Hundreds of BTL mortgages launched in March
Landlords have seen a surge in the number of available mortgage deals, with 233 buy-to-let deals hitting the market in March. Moneyfacts analysis shows that this marks the fifth consecutive month where the number of buy-to-let products increased, with 2,333 now available – the highest total in a year, with several lenders having pulled products in the early stages of the coronavirus crisis. Mortgage availability for the buy-to-let sector now stands at 81% of the pre-pandemic total, while the home buyer mortgage sector is at 68% of its previous level.
Barclays criticised over oil firms
Barclays has been accused of bankrolling large deals that expanded the fossil fuel industry despite a vow to act on climate change. Campaign group Market Forces say Barclays last year participated in deals that arranged $97.6bn of loans and bonds for eight of the world’s largest oil and gas, despite promising to shrink its carbon footprint to net zero by 2050.
Paragon in green mortgage launch
Paragon Bank is to offer a range of buy-to-let products which offer lower-deposit options to landlords awarded an Energy Performance Certificate rating between A and C.
Goldman Sachs staff set to return to London office
Goldman Sachs is preparing to have hundreds of staff back in its London office this week as companies eye a return to normal working conditions as lockdown restrictions ease.
INTERNATIONAL
Bank took year to notice missing £12m
A source claims that two former workers illegally wired £12m from Commerzbank to an account they had set up in Amsterdam in 2000 but the bank did not realise the sum had disappeared until about a year later. The men were extradited to Germany and convicted by a Frankfurt court in 2005.
Mizuho revises contingency plan
Mizuho, Japan's third largest lender by assets, will revise its contingency plan for a system failure by the end of June having suffered four system glitches during a two-week period from February to March.
FINANCIAL SERVICES
EU exodus yet to materialise
Lucy Burton in the Sunday Telegraph says a predicted exodus of jobs from the City of London post-Brexit has “yet to materialise”, with analysis suggesting just 7,600 financial services jobs have so far moved out of the UK due to Brexit. This, she offers, is “a tiny proportion of jobs in the UK's finance sector”. Ms Burton says tensions between the UK and Brussels have risen in recent weeks, despite the recent creation of a talking shop designed to formalise discussions about financial services. She reports that Bank of England officials are asking banks to seek approval before relocating any further UK jobs to the bloc, with concern that there has been some excessive requests from the European Central Bank “which go beyond what regulations require”.
Women under-represented in financial services boardrooms
Analysis by employment firm Fox & Partners shows that women make up only about one in seven of senior management roles at financial services firms, with just 7,552 of 50,639 senior management jobs in the sector held by women. An official review recently said a target of having 33% of FTSE 350 board positions held by women has been met, meaning financial services firms are lagging behind other sectors.
LSEG faces revolt over chief's pay rise
The London Stock Exchange Group (LSEG) faces a shareholder backlash over its decision to increase its chief executive’s salary by more than £200,000. LSEG said it plans to hand David Schwimmer a 25% pay rise because the takeover of the data provider Refinitiv had made the group a "significantly larger, more international and complex business". However, some of the company's biggest investors plan to vote against the remuneration report at the upcoming AGM.
City closes gap on Amsterdam
Data from Cboe, the exchanges business, reveals that the City of London has clawed back some of the ground in share trading that it lost to Amsterdam after Brexit. An average of €10.62bn of shares a day were traded in London last month, just short of the €10.68bn that changed hands in the Dutch capital. Amsterdam leapfrogged London in January with €9.22bn of trades, compared with London's €8.62bn.
Aviva sells stake in Italian division
Aviva has completed the sale of its stake in Italian life insurance joint venture Aviva Vita to partner UBI Banca in return for €453m and a €40m replacement loan. The deal was first announced in November as part of Aviva’s strategy to refocus efforts on its core business in the UK, Ireland and Canada.
Quilter sells international business to Utmost Group
Quilter is to sell its international business to specialist life assurance company Utmost Group for £483m. From the beginning of next year, Quilter will target annualised net client cashflow growth of at least 6% of opening assets under management and administration in the medium term.
HEALTHCARE
Investors urged to reject J&J CEO pay
Proxy adviser Glass Lewis has urged investors to reject the nearly $30m pay package for Johnson & Johnson CEO Alex Gorsky. This comes with the healthcare company opting to exclude costs related to several lawsuits when calculating stock awards for its top executives. Glass Lewis said: “In our opinion, the adjustments related to well-documented legal actions essentially shield executives' compensation from the detrimental impact of their decisions for the company”.
MANUFACTURING
Tax incentive set to drive investment
A poll from industry lobby group Make UK shows that the "super deduction" tax incentive announced in March’s Budget is set to boost investment for manufacturers this year. The survey saw 22.6% of businesses say they plan to increase investment as a direct response to the tax, with 28.1% bringing forward investment plans. Super deduction allows firms to deduct 130% of the value of plant and machinery from profits.
Factory growth hits ten-year high
Growth in manufacturing hit a decade high in March, while output rose at the quickest rate since late 2020. The UK Manufacturing Purchasing Managers' Index hit a reading of 58.9 in March - the highest since February 2011 on an index where a reading over 50 indicates growth. Business optimism hit a seven-year high, while employment in manufacturing rose at its fastest rate in more than six years.
MEDIA AND ENTERTAINMENT
Hipgnosis moves onshore
Music rights firm Hipgnosis Songs Fund has moved onshore in a move that means it will cease to be a Guernsey tax exempt vehicle and instead be treated as being resident in the UK for tax purposes.
REAL ESTATE
Investor clubs sidestep tax rules to dodge stamp duty
Wealthy Chinese investors are clubbing together to purchase prime London properties, lowering their tax bills by sidestepping new stamp duty charges for foreign buyers. A 2% stamp duty surcharge on residential property transactions by offshore investors came into force from April 1. However, some overseas buyers are circumventing the rules, teaming up and buying residential developments in lots of six or more, with such transactions qualifying for commercial rates of stamp duty, which are lower.
UK homes sales boom in March after extension of stamp duty holiday
The stamp duty holiday extension has helped maintain strong housing market activity, with TwentyCi saying 160,000 sales were agreed in March – the highest monthly total since its records began in 2017.
Bradford the most affordable option as 5% deposit deals return
With small deposit mortgage deals re-emerging after a decline amid the pandemic, analysis of Zoopla data by price comparison website Money.co.uk has revealed the most affordable cities for those with a 5% deposit. Bradford was the most affordable UK city, with an average property price of £133,150 meaning a 95% LTV deal would require a £6,658 deposit. Hull and Sunderland were the next most affordable options, requiring average deposits of £7,263 and £7,426 respectively.
RETAIL
Easter footfall doubles
High streets saw footfall more than double over the Easter weekend compared to last year’s lockdown. Visits to high streets were up 134% on Good Friday and Easter Saturday when compared to a year ago. Retail parks and shopping centres saw a similar boost in visitor numbers, with footfall up 100% on Easter Sunday. Despite outdoing last year’s visitor numbers, the Springboard figures show footfall is down 67% on pre-pandemic levels.
SPORT
Clubs seek loans to pay tax
The majority of Championship clubs will take advantage of the new £117.5m loan scheme set up by the English Football League, with at least 14 of the 24 clubs having utilised the scheme which was announced on Monday. The loans of up to a maximum of £8.3m per club will enable them to pay their PAYE tax bills, which are due soon.
ECONOMY
Spending set to surge as confidence climbs
The UK could be set to see a surge in spending as consumer confidence hits its highest level since before the 2008 financial crisis. A poll of 2,067 people has revealed pent up demand for activities including shopping and eating out could see people splashing their cash, post-lockdown. Older age groups are driving the climb in consumer optimism, having seen the least financial damage from the pandemic, with more than a quarter of over-65s having saved money in the last year. The report says consumers are set to spend across all sectors of the economy in the coming months, with uncertainty over international travel making outlay on foreign holidays the one exception.
OTHER
Firms repay £450m in furlough funds
Analysis shows that firms have repaid nearly £450m in taxpayer money claimed for staff wages during the pandemic. HMRC data reveals that as of February 18, 13,126 organisations had returned a total of £446.6m claimed under the furlough scheme. The emergency support rolled out to help firms amid the crisis has seen £58bn paid out so far.