Will lenders follow BoE and relax borrowing rules?
Following news that the Bank of England is consulting on withdrawing its mortgage affordability test, Nicholas Mendes, mortgage technical manager at mortgage broker John Charcol, said: “Lenders will still need to ensure that mortgages remain affordable, but the repayments would be based on market expected interest rates movement in the next five years or a per cent increase on today's rate, whichever is higher.” While this could mean, in the short term, homeowners are able to borrow more, added Mendes: “Lenders could also choose to not make any changes as predicting where rates could be in five years' time seems almost impossible.”
Wealthy investors look to private equity
New figures show that the value of UK private equity deals undertaken by wealthy individuals has hit the highest in a decade, doubling to £2.3bn last year. Low interest rates have made it easier for the society's most affluent to fund private equity deals, with many looking to access asset class returns without needing to fork out fund management fees, according to data from law firm Boodle Hatfield. Private equity has also consistently outperformed the public markets with returns of 13.9% per annum (on assets expected to be held for 10 years or more)compared to 5.6% per annum for the FTSE All Share Index. Tech was a huge area of growth in 2021, making up a quarter of all UK deals.
BlackRock funds ride high on ethical investment inflows
The FT looks at how BlackRock has dominated the ESG investment space, with the asset manager taking in 64% of all new net fund flows into ESG exchange traded funds in the past year.
European lenders reveal exposure to Russia
Credit Agricole has said its total exposure to Russia and Ukraine amounted to €6.7bn and said any impact from the conflict and sanctions would not impact its dividend. The French lender said total exposure in Russia and Ukraine represented approximately 0.6% of its total commercial lending portfolio as of December 31, 2021. Elsewhere, UBS said it has around $200m exposure to Russian assets and around $10m of outstanding loans to clients hit by western sanctions in response to Russia's invasion of Ukraine. The Swiss banking group said the Russian assets were used as collateral in loans to clients at its wealth unit, and a “small number” of its wealth management clients have been sanctioned in response to the invasion of Ukraine.
German regulator keeps close eye on VTB Bank
VTB Bank, Russia’s second largest lender, was put on a watchlist by German industry watchdog BaFin on Monday amid fears that a collapse of its European unit, based in Frankfurt, could hit other banks in the country. VTB is preparing to wind down its European operations after being hit hard by Western sanctions and was forced yesterday to temporarily turn off its phones following an unmanageable surge in calls.
US warns banks to be on high alert for Russia sanctions evasion
The US Treasury has told banks to watch out for Russian state actors and oligarchs using crypto to evade sanctions. Extra vigilance was advised, and a series of red flags issued.
Car-parts supplier blames Brexit for shift to Europe
Thermal Management Solutions Group (TMS), which supplies components to Ford and Jaguar Land Rover, is closing its plant in Reading after 60 years. The decision is based on the need for increased operating efficiencies, with costs associated with Brexit an additional factor, the company said. TMS's need to consolidate in Europe as it moves from supplying diesel and petrol cars to hybrid and electric vehicles also influenced the move.
Aston Martin charged after Britishvolt batteries deal
Aston Martin has signed a deal to develop high-performance batteries with Britishvolt. A memorandum of understanding with the battery maker will include a target of launching the first battery-powered electric vehicle in 2025.
Amigo Loans could resume lending
The Financial Conduct Authority has said that Amigo Loans can resume lending subject to conditions and if its new business rescue plan was approved by the London High Court. Last year, the High Court stated that it was “not satisfied that the court should sanction the scheme”, pushing back against Amigo’s original proposal to cap customer compensation claims. Since Amigo Loans’ last proposed scheme was rejected by the High Court, the firm has been working with the FCA to get a fairer deal for Amigo’s customers. The FCA said on Monday that the firm’s proposal represents an improvement on last year’s failed one and has the support of the Independent Creditors Committee that was set up to advance the best interests of those customers owed redress. The FCA set out the conditions the firm would need to satisfy to be able to return to lending, which include it meeting the threshold conditions, testing of the firm’s new lending system being completed to the satisfaction of the FCA and the firm addressing any other issues that may arise.
FCA sounds fresh warning over Binance
The Financial Conduct Authority has issued a fresh warning about Binance after the cryptocurrency exchange agreed a tie-up with Eqonex, the parent company of Digivault, a London-based digital asset custody group registered under money laundering regulations (MLRs). Binance said it had started a new payments arm called Bifinity and that the division had agreed a tie-up with Eqonex, which is listed on Nasdaq. The watchdog said that “individuals and entities that are part of the Binance Group may have become beneficial owners of Digivault for the purposes of the MLRs” and warned: “The FCA did not have powers to assess the fitness and propriety of the new beneficial owners or the change in control before the transaction was completed.” Last June, the FCA banned the Binance’s UK arm, Binance Markets, after it fell short of anti-money laundering standards.
Top banker joins Copper
Digital asset custody and trading infrastructure provider Copper has hired Sabrina Wilson as Chief Operating Officer. Wilson was most recently the global co-head of the Futures, OTC Clearing and FX Prime Brokerage business at Citi. “As institutional investors increasingly embrace crypto as an essential asset class, I am confident the advances in technology that Copper is making will become the gold-standard for global financial infrastructure in the future,” Wilson said.
Seraphim Space appoints UBS finance veteran
Fund manager Seraphim Space has appointed former UBS director Sarah Shackleton as its new chief operating officer. “Sarah possesses a wealth of experience in overseeing the day-to-day administrative and operational functions of billion-dollar funds,” CEO Mark Boggett said, adding: “Which will be integral to ensuring, as the managers of the world’s first publicly listed space tech fund, that we continue to grow our portfolio across the full space tech ecosystem.”
Investors flock to Aim to avoid soaring IHT bills
The Wealth Club, a broker, has seen inflows into IHT-free shares on Aim quadruple from £5m last year to £20m as taxpayers attempt to reduce spiralling death duties. The number of people investing in portfolios made up exclusively of Aim shares that are exempt from the 40% levy has more than doubled, the broker said.
Shareholders force Unilever to make products healthier
Unilever has committed to overhauling the way it reports on the health of its products after a shareholder activist group lambasted the company for lacklustre performance on nutrition. ShareAction filed a proposal in January urging bosses to set out more ambitious sales targets for health products and adopt government-endorsed health models. Institutional investors including pan-European asset manager Candriam, Dutch asset manager ACTIAM and the UK’s Guy’s & St Thomas’ Foundation backed the proposal, which has now been withdrawn after Unilever made pledged a series of improvements.
House prices rise at fastest annual pace since 2007
House prices increased at the fastest annual pace since 2007 in February to hit a new record high. Halifax said that at 10.8%, the annual rate of house price growth was the strongest since June 2007. The increase took the average house price across the UK to a new record high of £278,123. Property values increased by 0.5% month-on-month. Russell Galley, managing director, Halifax, said a lack of supply continues to underpin rising house prices. He continued: “Looking ahead, as Covid moves into an endemic phase and almost all domestic restrictions are removed, geopolitical events expose the UK to new sources of uncertainty.” The average house price in the West Midlands in February was £234,481 – an annual increase of 9.7%.
Retail sales jump in February
The latest retail sales monitor from the British Retail Consortium revealed that total sales jumped by 6.7% in February - 2.7% higher than a year ago on a like-for-like basis. Helen Dickinson, chief executive of the BRC, said: “February saw continued sales growth, although dampened by Storm Eunice and falling consumer confidence.” She added: “The future is looking increasingly uncertain, with current demand unlikely to be sustained. Consumer confidence, falling in recent months, will likely tumble further against the backdrop of the current geopolitical events.” Non-food sales increased by 12% over the three months to February, compared with the same period a year earlier. Meanwhile, Barclaycard's consumer card spending data showed that shoppers spent 13.7% more in February than the same month in 2020. Jose Carvalho, head of consumer products at Barclaycard, said: "The nation is keen to make the most of life following the easing of Plan B restrictions, with many Brits still purchasing treats to give themselves a boost."
UK faces biggest income squeeze in nearly 50 years
The Resolution Foundation has warned that a typical household's income will fall by about £1,000 this year once the effect of inflation is accounted for. That would be the biggest real-terms fall in incomes since the mid-1970s, the think tank added. It expects inflation to peak in April at 8.3% - much higher the Bank of England's forecast of 7.25% back in February. “Britain has stepped out of a global pandemic, and straight into a cost-of-living crisis,” said Adam Corlett, principal economist at the think tank. “The tragic conflict in Ukraine is likely to further drive up the price of energy and other goods and worsen the squeeze on incomes that families across Britain are facing. Inflation may even exceed the peak seen during the early 1990s, and household incomes are set for falls not seen outside of recessions,” he added.
Economic Crime Bill speeds through Commons
The Government’s Economic Crime Bill has been voted through the Commons unopposed as British lawmakers rush to stop wealthy Russians using the City of London for money laundering and hiding ill-gotten gains. The bill, which now goes to the House of Lords and is expected to become law later this month, contains several measures to tackle oligarchs and companies associated with Vladimir Putin. Foreign owners of UK companies will be forced to declare and verify their identities with prison sentences of up to five years for those who fail to do so. Unexplained Wealth Orders will also be strengthened, and the bill will make it simpler for UK authorities to sanction individuals already punished by allies such as the US and EU.
World Bank approves $723m package for Ukraine
The World Bank has approved $723m (£551m) in loans and grants for Ukraine and is continuing to work on another $3bn package of support in the coming months for the country. The package includes a $100m pledge from the UK.