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Daily News Roundup: Wednesday, 12th May 2021

Posted: 12th May 2021


Amigo compensation offer challenged by FCA

The Financial Conduct Authority is opposing a plan announced by investors in high interest loans company Amigo to pay customers lower compensation than they should have got as compensation for misselling. In a letter to Gary Jennison, Amigo's chief executive, the regulator said: "The FCA remains concerned that redress creditors will have their claims significantly reduced whilst other stakeholders, such as shareholders, are not being asked to contribute their fair share to enable the firm to stay solvent." This comes after Provident Financial announced that its high interest lending operation would also be wound up.

NatWest chief Rose 'optimistic' about economic recovery

The Government has sold another tranche of shares in NatWest, raising some £1.1bn. The sale to institutional investors takes the Treasury's share of the bank down from 59.8% to 54.8%. City AM meanwhile features an interview with the lender's chief executive Alison Rose, who says the firm is a “bellwether of the UK economy… we're inherently linked to the success of our customers.” She went on: “We're still one of the global financial centres which services the economy more broadly… The global economy has been through a tough space... I think the UK has huge strengths. There'll be challenges in tough times but I'm positive about the recovery and the resilience the UK economy and SMEs have."

Lloyds risks reputational damage with Embark acquisition

Lloyds Banking Group's plans to buy Embark could see the bank exposed to claims of millions of pounds in compensation related to the company's Rowanmoor division, which is facing hundreds of claims for compensation over failed investments in The Resort Group.

JP Morgan's UK staff set for return to office

JP Morgan has told its UK staff that more of them will return to its London and Bournemouth sites from 21 June as Covid restrictions start to ease. Offices will operate at maximum 50% of capacity but employees can expect a “consistent schedule” which combines both remote and office working.

Supplementary rates risky, says Bailey

The Bank of England Governor has warned against the creation of alternative rates amid the transition from Libor to the central bank-created rates. Andrew Bailey said: "While these rates may offer convenience as a short-term substitution, they present a range of complex longer term risks."


Pension funds and tech ventures need each other

James Wise asserts in City AM that restrictions on pension funds investing in venture capital should be lifted so they can prosper from Britain's tech boom. UK savers are losing out on more than just money - the country's highly innovative but risky tech companies have less capital available, leaving the UK in danger of falling behind.


Think tank calls for banks to guard against climate change losses

Liberal think tank the Center for American Progress has suggested that the US Federal Reserve should force lenders to hold more cash as a safeguard against potential losses resulting from climate change. Federal ReserveGovernor Lael Brainard said earlier this year that "It is increasingly clear that climate change could have important implications for the Federal Reserve in carrying out its responsibilities... The potential damage to the financial system is too great for regulators to wait."

Commerzbank and ODDO BHF in equities business plan

Commerzbank has announced a plan to outsource its equities trading and research business to Franco-German firm ODDO BHF. Commerzbank management board member Michael Kotzbauer commented: "We have decided on ODDO BHF as a partner because this financial services group will contribute a high level of expertise in equity sales and trading for markets in Europe and North America."

Mediabanca CEO dismisses Unicredit merger

Alberto Nagel, the CEO of Mediabanca, has rejected the idea of a tie-up with Unicredit arguing on Tuesday that it made little sense. Speculation about a merger followed the appointment of veteran dealmaker Andrea Orcel as CEO of Unicredit last month.

PKO BP down after CEO exit

Zbigniew Jagiello, the CEO of state-run Polish bank PKO BP, has submitted his resignation, the lender said on Tuesday. The announcement sent its shares down as much as 8%.


Chip shortage pain continues for automakers

Nissan has projected a third year of net losses with production likely to drop by 500,000 vehicles between April and September because of the semiconductor crisis. Meanwhile, Renault boss Luca de Meo also said that it would probably take months for semiconductor supply to catch up with soaring demand. The French carmaker is meanwhile considering introducing a battery-swapping capability in its electric cars, potentially becoming the first big carmaker to embrace the technology. Elsewhere, Daimler will probably phase out combustion engine cars before its internal target of 2039, the FT reports, due to increased demand for its electric Mercedes models.


IAG raises €800m ahead of reopening

IAG is to raise €800m by selling convertible bonds as part of moves to capitalise on the global easing of travel restrictions.


City suffers £2.3trn derivatives loss in a single month

Some £2.3trn worth of derivatives business left the City of London in March , according to an estimate by IHS Markit. The majority went to the US while venues in the EU also gained. But experts say although some capital markets activity has migrated from the UK to the EU, there is no doubt that the UK remains the largest capital markets hub in Europe. Elsewhere, the Times’ Katherine Griffiths reports that the financial services industry, like the rest of the country, is feeling positive about a post-Brexit Britain, despite the fact that a growing number in the City do not expect Brussels to grant the UK access to EU markets.

Small firms targeted with eBay pilot loans scheme

eBay has launched into small business financing with plans to lend between £500 and £1m through fintech provider YouLend to 300,000 small business and solo entrepreneurs who sell through its website. The lending programme, called Capital for eBay Business Sellers, will be repaid directly through a percentage of sales, rather than monthly payments.

MPs demand probe into sale of LV=

A group of MPs has called on the Governor of the Bank of England to intervene in the proposed sale of the mutual insurer LV= to private equity group Bain Capital. The insurer has recommended a £530m offer but MPs fear the board of LV= may be misleading its 1.25m members

Expanding Zencargo in fresh raise

Zencargo has raised a further £30m to help businesses make decisions through a real-time overview of their supply chain. The London-based digital freight forwarder will use the funding to expand and make inroads into trade finance under the leadership of its newly appointed CFO, Chris Greenacre.

Billionaires Peter Thiel and Alan Howard back new $10bn crypto exchange

A venture run by blockchain software company called Bullish Global is being backed by several billionaires as speculation about a major shift to decentralised finance grows.

Payment app PayPay could be floated - Softbank

Payment app PayPay could be listed by owner Softbank, after the latter's chief executive Junichi Miyakawa remarked last year: “We want PayPay to IPO in the future so they will become independent... I don't think that would be too far out.”


Thyssenkrupp predicts first annual adjusted profit in three years

Thyssenkrupp has announced that it expects to report its first annual adjusted profit in three years, citing an increase in demand for steel among other issues.


Social media firms will be required to safeguard children online

New laws to be unveiled by the Government today will require social media companies to protect children from harm online or face being shut down. Companies could face fines of up to £18m or 10% of global turnover, whichever is greater for breaches of the duty of care laws. Platforms will also have to protect “freedom of expression” with the new requirements overseen by Ofcom.


Morrisons could return cash to shareholders as pandemic impact wanes

Morrisons said this morning it intends to “refresh” its capital allocation plans later in the year as profits recover from the impact of COVID-19, suggesting that it might step up cash returns to investors. The supermarket group’s same-store sales in the 14 weeks to May 9th were up 2.7% on an annual basis, ahead of an average analyst forecast of 1.6%; including fuel, they grew 4.7%. Compared to the same period in 2019, like-for-like revenue rose 8.7%. Morrisons said profit before tax and one-off items would be higher this year than the £431m it would have achieved last year, had it not waived its right to claim the £230m business rates relief. Analysts are forecasting profits of £435m this year.


Boom removes need for tax hikes

An analysis by Oxford Economics of the Bank of England’s upgraded forecasts indicates that Rishi Sunak will have £20bn more than expected to play with. Andrew Goodwin, chief UK economist at Oxford Economics, said: “The prospect of better growth has given him more flexibility. Tax hikes should be off the table, certainly new tax hikes.” Meanwhile, the BoE's chief economist Andy Haldane has said his Monetary Policy Committee colleagues are being too gloomy about the pace of the economy's recovery from the pandemic and this creates the danger of rapidly rising inflation.


Dogecoin makes Goldmans exec a millionaire

A senior manager at Goldman Sachs in London has quit the bank after making millions from investing in dogecoin, according to City sources. The digital currency, which launched as a joke, has risen by about 1,000% in value this year.

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