BANKING
Homebuyers with large deposits hit by mortgage rate increases
The cost of a typical two-year mortgage deal for homeowners with a 35% deposit has hit an eight-year high, according to research from Moneyfacts. Average mortgage rates have also risen for the first time in four months. The era of ultra-low mortgages came to an end last month amid speculation the Bank of England was preparing to raise interest rates to keep a lid on spiralling prices. In the event, the base rate was held at 0.1%. But banks and building societies have continued to pull their cheapest offers - and this has pushed up the overall cost of two and five-year deals. A typical two-year fixed rate for borrowers with at least 35% equity in their home is now 2.5%- up from 2.11% just last month and 1.99% two years ago. This is the highest average two-year rate for borrowers in this lending bracket since 2013, says Moneyfacts. The average five-year deal in the bracket has also jumped to 2.7%, from 2.32% in October and 2.18% in November 2019.
Banks need to help first-time buyers
Michael Gove has urged banks to offer first-time buyers riskier mortgages to help solve the housing crisis. According to the communities secretary, lenders had been "overcautious" since the 2008 financial crash. He told MPs that the housing crisis would not be fixed by simply building more homes. Mr Gove also criticised the developers of dangerous highrise buildings, who he accused of "behaving like cowboys". He said that blocks covered in cladding had been "essentially encased in petrol" as he promised to protect leaseholders from "grotesquely disproportionate" fees.
FSB dismayed with small business compensation scheme
The Federation of Small Businesses has voiced its disappointed at figures from the Business Banking Resolution Service showing just eight cases have been concluded. The group said the scheme must rapidly get to the point where “hundreds of cases” are being resolved and settled so that it is “delivering on its mandate”. Only one company has received a payout so far, which sources said was a very modest sum.
Standard Chartered to make retail return in UK
Standard Chartered will return to retail banking in Britain for the first time since the late 1990s, with a climate-focused digital offering. Backed by innovation arm SC Ventures, and developed with Starling Bank, Shoal will allow customers to invest exclusively in green and sustainable projects.
Treasury reduces its holding in NatWest
The Government has shaved 1% off its stake in NatWest on Friday raising £248m. The Government originally held an 84.4% stake in NatWest, but this is now reduced to 52.96%.
PRIVATE EQUITY
Japan's SoftBank falls into the red
China’s crackdown on the technology sector has led to loses in SoftBank’s Vision Fund investment portfolio. The Japanese technology conglomerate reported a $3.5bn loss for the fiscal second quarter, compared to with a profit of $5.5bn year earlier. Yielding to investor pressure following the loss, SoftBank founder Masayoshi Son has promised a ¥1tn ($8.8bn) share buyback programme over the next 12 months.
Investors take aim at private equity’s use of private jets
Investors are calling for improved fee and expense disclosures by private equity managers amid frustration over suspected overcharging.
INTERNATIONAL
OCC says Wall St banks must disclose climate threats by next year
The acting chief of the Office of the Comptroller of the Currency, Michael Hsu, has said Wall Street banks must be prepared to respond to questions about their exposure to climate change by next year. The OCC expects to issue more formal climate-change guidance by the end of next month, he said. "Climate change poses significant risks to the financial system. Detailed reports have been published. Eloquent words have been spoken.
It is time to convert those words into action," he said in his prepared
remarks.
Credit Suisse to recommend its hedge fund clients join BNP Paribas
BNP Paribas has signed a referral agreement with Credit Suisse which will see the Swiss bank recommend its hedge fund clients move over to the French bank as it withdraws from prime broking services following the collapse of family office Archegos Capital. Credit Suisse's exit from the market is a further boost to BNP Paribas, which, two years ago bought Deutsche Bank’s global prime finance unit and its electronic equities business.
Wall St banks make push into Europe’s private capital markets
US banks including Goldman Sachs and JPMorgan Chase are expanding their private placements businesses in Europe in the hope that the increase in fundraisings by private companies will prove to be more than a temporary boom.
Citigroup expects to take up to $1.5bn charge on Korea exit
Citigroup expects to incur a charge of up to $1.5bn in connection with its exit from its consumer business in Korea as the bank retreats from 13 markets across Asia, Europe and the Middle East to refocus on more profitable business lines.
AUTOMOTIVE
Deal to end car emissions by 2040 idles as motor giants refuse to sign
Some of the world’s largest carmakers along with US, China and Germany are shunning a global deal to eliminate new car emissions by 2040 just days before the pledge is due to be revealed at the COP26 climate summit.
FINANCIAL SERVICES
FCA queried over LV takeover
The Financial Conduct Authority (FCA) has been asked by MPs to publish what it knows about Royal London’s offer to buy LV as concern grows over the buyout of the mutual by US private equity firm Bain Capital. The chairman of the All Party Parliamentary Group for Mutuals Gareth Thomas asked the watchdog to confirm reports that Royal London offered £10m more than Bain. Thomas also urged the FCA to release any information it has about how much LV chief executive Mark Hartigan and chairman Alan Cook will be paid if the deal passes.
HEALTHCARE
Blackstone bets $250m on London biotech
Blackstone will inject $150m into UK life sciences firm Autolus with a further $100m to follow. The biotech was spun out of University College London in 2014 and is developing methods of programming the body's natural T-cell defences to better target and attack tumours.
MEDIA & ENTERTAINMENT
Inmarsat sold to US rival
British satellite group Inmarsat has been bought by US peer Viasat in a cash-and-paper deal that values the London-based group at $7.3bn. Inmarsat was acquired in December 2019 for about $6bn by a consortium of four buyout firms led by Apax and Warburg Pincus. Viasat is backed by four private equity firms that will end up with a combined 37.5% of the enlarged group.
REAL ESTATE
Sirius raises £137m to fund BizSpace takeover
Sirius Real Estate has raised £137m through a share placing to help fund its acquisition of BizSpace. Sirius has agreed to buy Helix Investments, which is behind BizSpace, for a cash consideration of around £245m. The deal will be funded by the raised capital as well as new and existing debt.
RETAIL
Retail sales rise amid concerns over Christmas shortages
Figures reveal that total retail sales rose by 1.3% in October, compared with 4.9% growth in October 2020, while sales were 6.3% higher on a two-year basis. Online non-food sales fell by 8% in October, compared with 39% growth a year earlier, in a sign that more shoppers are returning to the high street. Meanwhile, in-store sales of non-food items rose by 7.9% overall and increased 4.5% on a like-for-like basis last month. Analysis also showed that clothing and footwear sales climbed last month but sales of electronic items have been held back by the global shortages of microchips. Separate figures by Barclaycard reveal shoppers have started spending earlier than normal for Christmas because of fears of shortages. Over a third of shoppers are changing their approach to Christmas shopping this year with 52% buying gifts earlier than normal, particularly children's presents. Online spending at toy retailers jumped by 38.4% in October compared with 9.9% in September.
ECONOMY
Governor warns Bank will raise rates if inflation drives higher wages
The Bank of England will raise interest rates if expectations of higher inflation drive up wages, says Governor Andrew Bailey. He said the Bank would act before the impact of inflation became widespread, stating: "Once you start to get an increase in inflation of this sort, we want to stop it becoming generalised in the economy." Bailey cited the risk of more bottlenecks, especially in demand for labour, which could fuel expectations of higher inflation, adding: "And that's why we would have to act on interest rates if we see that evidence becoming clear." His comments helped the pound - which came under pressure after last week's decision by the monetary policy committee - to claw back losses. It was trading up 0.43% against the dollar, at $1.355.
OTHER
Barclays, Innocent and Ecotricty named in new 'sport for good' index
Barclays and drink maker Innocent are among five British companies to be named on the inaugural Laureus Sport for Good Index. Octopus and Ecotricity and renewable running shoe brand Hylo Athletics are the other UK companies on the global list of brands that deliver social or ecological impact through sport. The list is based on seven criteria, including commitment to environmental, social, and corporate governance and level of investment in causes that leverage sport for good.