Savers may be underestimating rates
Hargreaves Lansdown has compared easy access rates being offered by high street banks with what savers estimated they were receiving, finding that customers may be significantly underestimating their rates of interest. Savers typically thought they were getting around 0.4% with Barclays – but its everyday saver account pays 0.01% on sums below £50,000. A quarter (25%) of those with NatWest thought they were making more than 1%, while its instant saver account actually pays 0.1%. Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “On average, Barclays savers thought they were making 40 times the interest.” “The next biggest gap was at NatWest, where savers make 0.1%, but on average they think they’re getting 0.8%.” She said this is “an expensive mistake to make, especially at the moment while inflation is running rampant.” Ms Coles noted that it is possible to earn 1.56% from Virgin, “if you’re prepared to open a current account”, or 1.33% from Yorkshire Building Society, “with no strings attached.”
Agnew stands by criticism of Starling’s Covid loan failings
The government’s former counter-fraud minister has reiterated his fierce criticism of Starling's performance on distributing state-backed emergency loans. Lord Agnew accused the digital lender of acting “against the government and taxpayers’ interests” by failing in its counter-fraud duties on the £47bn bounce back loan scheme. Starling chief executive Anne Boden demanded a withdrawal of claims that Starling was “one of the worst when it came to validating the turnover of businesses or submitting suspicious activity reports”. But Lord Agnew said: “I have no plans to withdraw my comments until I can see some data that puts my mind to rest.” He has submitted a series of questions about the lender’s performance on the scheme.
Metro Bank sued over ‘magic money machines'
A US software company has launched a High Court case against Metro Bank over claims the lender revealed trade secrets for its "magic money machines". Arkeyo created software for Metro's coin-counting machines but is now suing Metro for damages over claims the bank misappropriated its intellectual property by leaking its software to a rival company and infringing its copyright. Arkeyo alleges that Metro met with personnel from rival software companies Saggezza and Cummins to “discuss how to duplicate Arkeyo's software to enable Metro to replace Arkeyo with Saggezza… as Metro's software vendor."
Banking redress chief earns £1m
The Business Banking Resolution Service paid chief adjudicator Alexandra Marks £471,000 last year, on top of the £505,000 she received in the previous 18 months. This comes despite the banking redress scheme producing only five compensation payouts. The resolution service started accepting “pre-launch” registration of cases in December 2019 and its full launch came in February last year. Kevin Hollinrake, a member of the Commons Treasury Committee, has called for it to be scrapped over its “pitiful” lack of progress.
Nationwide makes branch number pledge
Nationwide has vowed to keep its 625 branches open across the UK for an extra year in a bid to help hard-pressed families amid the cost-of-living crisis. It says it will keep a branch open in every town or city where it already has a presence until at least 2024.
Private equity firms close in on Amey deal
Private equity firm Buckthorn Partners has teamed up with US peer One Equity Partners to buy up the outsourcing company Amey. The two private equity firms have entered a period of exclusive negotiations, during which they hope to finalise their £200m takeover. The deal, which has been in the works for at least nine months, could be sealed within a matter of weeks. Amey, one of Britain’s biggest civil engineering businesses, runs London’s Docklands Light Railway and the Manchester Metrolink.
New car sales down 20%
New car sales fell 20% year-on-year last month, with dealers reporting their worst May trading since 1992, barring 2020 when the Government shut them down amid the pandemic. May saw 24,000 new cars registered in the UK, with this 32,000 fewer than in May 2021 as supply chain issues hit the industry. Society of Motor Manufacturers and Traders data shows there have been 661,000 new cars sold in the year to date. This is nearly 37% down on the 1.04m sold in the first five months of 2019, the year before the pandemic.
Barratt kicks off search for next chairman
Housebuilder Barratt has kicked off a search for a new chairman, with John Allan preparing to step down and expected to leave the role at next year's AGM. Mr Allan joined Barratt in 2014 and is set to reach the maximum nine years recommended by the UK Corporate Governance Code in 2023. Barratt has reportedly instructed headhunters at Russell Reynolds Associates to identify a successor to Mr Allan, who also chairs Tesco.
Miller Homes appoints industry veteran to board
Miller Homes has appointed Stephen Stone to its board. He has a 40-year career in housebuilding, most notably as chief executive of Crest Nicholson between 2005 and 2019, and more recently as chairman of Keepmoat Homes. He joins Miller's board as a senior non-executive director.
‘Significant barriers’ for female progression in fintech
Industry body Innovate Finance has warned that “significant barriers still exist” to female progression in the fintech sector, despite progress in regard to gender representation. While a report from Innovate Finance saw more three quarters of women working in fintech say they believe their firm is inclusive and 56% feel it is diverse, it also flagged issues around gender parity, with female founders still lagging on areas including access to equity and debt fundraising. Fewer than half of those surveyed said they feel able to raise equity capital, compared to 62% of men, and just 31% feel able to access debt funding, compared to 44% of men. Innovate Finance CEO Janine Hirt said: “It’s clear there is still a long way to go in ensuring everyone can succeed within the sector, including supporting underrepresented founders in accessing increased capital and investment.”
BlackRock will not be the 'environmental police'
Larry Fink, chief executive of BlackRock, has warned that the world’s largest money manager will not act as “the environmental police.” He said it is wrong to ask the private sector to ensure that the companies they invest in are doing their part to combat climate change. BlackRock’s latest stewardship report stated that the company will not support proposals that could lead to companies being "micromanaged," including those that are “unduly prescriptive and constraining on the decision-making of the board or management, call for changes to a company's strategy or business model or address matters that are not material to how a company delivers long-term shareholder value."
LEISURE & HOSPITALITY
Schultz to stay on as Starbucks interim boss
Howard Schultz has confirmed he will stay on as interim chief executive of Starbucks, while the company continues to search for a permanent successor. The company said the new chief executive is expected to be named in the autumn, with Mr Schultz retaining his seat on the Starbucks board after a formal handover takes place Q1 2021.
Off-market sales hit highest point since 2015
Analysis shows that one in ten homes have sold without coming to market this year, with this the highest proportion since 2015. London has led the way, with 23% of sales in the capital agreed without the property being advertised. The average home listed privately typically sold for £1.2m in the five years before the pandemic, but this fell to £979,000 in 2021 and has reduced further to £858,000 in the first five months of this year. The average home sold off-market this year sold for 99.5% of its asking price, higher than the previous record of 98% recorded in 2014. Meanwhile, similar homes on the wider market sold for an average of 99% of their asking price.
Shoppers spent less for second consecutive month
Shoppers are spending less than they were a year ago, according to the retail sales monitor from the British Retail Consortium (BRC), with sales down for the second month in a row in May. Total retail sales in May declined by 1.1% compared to May 2021. That was a sharper slowdown than in April, when the data showed a fall of 0.3% compared to April 2021. BRC chief executive Helen Dickinson said: “It is clear the post-pandemic spending bubble has burst, with retailers facing tougher trading conditions, falling consumer confidence, and soaring inflation impacting consumers' spending power.”
Rising cost of living will not be felt evenly, says FCA
The Financial Conduct Authority is preparing for the impact of the cost of living crisis. Sheldon Mills, executive director of consumers and competition at the regulator, has warned that the surging cost of living will present challenges to the FCA’s efforts to improve financial inclusion. He described the matter as a “perfect storm,” warning that the squeeze on household finances “could push more people into vulnerability and the risks of financial exclusion are set to intensify.” He added: “The impacts of these risks will not be distributed evenly,” with higher income households “likely be cushioned from the impacts”, whereas other households will experience a squeeze on their finances “and a few of them will be struggling.”
The poorest will be hit hardest by spiralling inflation
Experts have warned that inflation will disproportionately impact the poorest households in society, with renters, people on lower salaries and those living outside of London left more exposed to soaring prices. This comes as inflation in the UK reached 9% in April, with a 53% increase in electricity costs and a 29% rise in petrol prices since April last year. However, personal inflation rates are expected to rise to an average of 14% among the lowest 10% of earners, compared with 8% for the wealthiest. Resolution Foundation's Jack Leslie said: "We are seeing a very material difference in the experience of inflation between poorer families and richer families because they spend so much more on gas and electricity bills."
Brexit ‘scarring’ costs companies £500bn, says stockbroker
City stockbroker Panmure Gordon says UK public companies are trading at a valuation discount totalling about £500bn since the “scarring impact” of the Brexit vote in 2016. Since Britain voted to leave the EU, the valuation of companies on the FTSE all-share index has settled at a 20% discount to the rest of the world. The discount rises to 37% on an unadjusted basis that does not take account of factors such as the FTSE’s greater weighting of banks. Panmure chief economist Simon French said the gap reflected a lack of confidence among investors that UK companies can deliver on their profit forecasts, with concerns about a no-deal Brexit and a trade war with the EU having added to uncertainty. Panmure’s analysis shows UK equities trade on a valuation of 12 times next year’s earnings, “materially below” the 16.1 figure for the rest of the world and the UK’s 30-year average of 13.7. Mr French notes that UK valuations have been “stubbornly below these levels” for the six years since the Brexit vote.