BANKING
Start Up Loans programme hits £1bn
The British Business Bank's Start Up Loans programme has reached a lending milestone of £1bn, with over half of the funding going to small businesses led by women and ethnic minorities. The programme, which has an average loan amount of £9,500, has supported around 105,000 businesses since its launch over a decade ago. The Government-backed loans scheme targets underrepresented groups who face difficulties accessing mainstream finance. Approximately 40% of the loans, amounting to £371m, have been provided to businesses founded by women, while around 20% (£201m) has been lent to individuals from ethnic minority backgrounds. The programme has also seen significant funding directed towards businesses outside of London and the South East. Richard Bearman, managing director for Start Up Loans, has expressed pride in achieving the £1bn lending milestone and emphasised the programme's commitment to supporting entrepreneurs across the country.
PRA blocks Metro Bank plans to reduce capital charge
Metro Bank has announced that plans to reform its calculation of capital requirements have been rejected by the banking watchdog. The bank has been working with the Prudential Regulation Authority (PRA) to secure approval for the use of internal risk models for its residential mortgage business. However, it has confirmed that the PRA “has indicated that at this stage more work is required by the company which means approval will not be attained during 2023.”
Barclays to cut 450 jobs
Barclays has reportedly told staff it is planning to cut around 450 jobs across the business, with mid- to senior-level staff at the bank’s head office likely to be affected. Trade union Unite said it was an “unnecessary and unjustified” decision, with national officer Dominic Hook saying: “This isn’t an organisation struggling to survive, this bank is making billions of pounds of profits.” The union has urged Barclays to “scrap these plans and reconsider,” calling for bosses to commit to there being no compulsory job losses.
Santander withdraws top-paying savings account
Santander has withdrawn its top-paying limited edition easy-access savings account, just over a week after it was launched. The account pays a best-buy rate of 5.2% on balances up to £250,000 for 12 months and was due to be available until this Sunday. Santander had warned it could be pulled earlier if demand was high. The account proved so popular that it has been withdrawn with less than a day's notice. The deal was the most generous the bank has offered in 14 years and was available to both new and existing customers.
Monzo revamps corporate structure for expansion
Monzo is reorganising its corporate structure to support its international expansion strategy and potential stock market listing. The establishment of a new holding company, Monzo Bank Holding Group, will help the bank avoid punitive capital treatment by regulators as it expands into additional overseas markets. The move is seen as a logical step to increase efficiency and support future growth.
UBS kick-starts Credit Suisse exit from Canary Wharf
UBS has started the process of moving Credit Suisse out of its Canary Wharf skyscraper, delivering a blow to the financial district that is already losing HSBC as a landmark tenant.
INTERNATIONAL
HSBC appoints China head of investment banking
HSBC has hired former Goldman Sachs veteran Bill Chu as its China head of investment banking. Mr Chu will work with the bank's sector, product, and coverage teams to further grow its Greater China franchise and drive greater connectivity between China and its international markets.
Nigerian banks barred from paying dividends with forex gains
Nigeria's central bank has issued a circular barring banks from using earnings from one-off foreign exchange gains to pay dividends. The central bank said changes to the currency regime have affected banks to varying degrees and that they are required to set aside the foreign currency revaluation gains as a buffer against future adverse movements in the exchange rate.
FINANCIAL SERVICES
City faces decline, financial services leaders warn
The City of London is at an "inflection point," with nearly two thirds of financial services leaders warning that the City's star will wane without intervention. According to Lloyds Bank's financial institutions sentiment survey, 64% of sector leaders think that the City will stagnate as a global financial centre compared to rivals. A quarter of firms said they would relocate some of their UK-based staff overseas if London loses its status as one of the world's leading finance hubs in the next five years. Nearly 80% of respondents said better relations between the UK and EU would help enhance London's status, while two fifths said that there should be a relaxation of immigration rules for skilled workers. Chancellor Jeremy Hunt announced a package of reform in December and the Government has already passed its flagship Financial Services and Markets Bill, which empowers regulators to make decisions previously made at an EU-wide level. Lisa Francis, managing director, Institutional at Lloyds Bank Corporate and Institutional Banking, said: "The City of London's status as a leading financial centre is at an inflection point."
FCA to roll out tougher rules on financial product adverts
The Financial Conduct Authority (FCA) will crack down on adverts for financial products by introducing new screening checks. Firms that approve financial adverts will be asked to prove they have the skills and expertise to approve adverts and that those signing them off understand the product. Under the current rules, any regulated companies have been allowed to approve financial promotional material. Firms will have to apply to the FCA between November 6 and February 6 to continue approving adverts, ahead of the new rules coming into force on February 7. Sarah Pritchard, executive director of markets at the FCA, said: “Firms need to make sure people are equipped with the right information at the right time, so they can make properly informed decisions. As we face the rising cost of living, consumers are having to make difficult decisions about their finances and how they pay for things, so this is more important than ever.”
MANUFACTURING
UK manufacturing output climbs the rankings
The UK's manufacturing output has surpassed France, making it the eighth largest manufacturing power in the world. According to trade body Make UK, the UK's manufacturing output was worth £218bn in 2021, compared to France's £210bn. Recent figures suggest that the UK's manufacturing output continued to grow to £224n in 2022. Business and Trade Secretary Kemi Badenoch welcomed the UK's rise in the global rankings and highlighted the Government's commitment to growing advanced manufacturing in the country. China remains the largest manufacturing nation, followed by the US, Japan, Germany, South Korea, India, Italy, the UK, France, and Russia. Manufacturing accounts for about 9% of the UK's GDP and provides 2.6m jobs, with wages 9% higher than the wider economy. Despite challenges, recent wins such as BMW's £600m investment have boosted the sector.
REAL ESTATE
Value of mortgage arrears up by a third
Bank of England figures show that the value of UK mortgage arrears jumped by almost a third in April-June compared with the same period in 2022, with outstanding mortgage debt now at £16.9bn - the highest total since 2016. New arrears cases equated to 16% of the total outstanding mortgage debt in April to June, with the quarter-on-quarter jump in the proportion of mortgages in arrears the highest since 2018.
RETAIL
Poundland owner snaps up 71 Wilko sites
Pepco, the owner of Poundland, is to take on the leases of 71 Wilko sites, with these to be converted into Poundland branches in a move that could throw a lifeline to some of the 1,800 staff. B&M has bought 51 Wilko stores in a deal worth £13m, with these to become B&M stores. Wilko’s administrator said it will continue to engage with other retailers around any interest in other Wilko sites. Sources say The Range is the frontrunner to acquire the Wilko brand and online assets.
Aldi and Lidl lose market share in price war
Aldi and Lidl have lost market share for the first time in months as British supermarkets engage in a price war. Aldi's share of the grocery market fell from 10.2% to 10.1% in the 12 weeks to September 3, while Lidl's market share slipped from 7.7% to 7.6%. Despite the decline in market share, both Aldi and Lidl saw sales growth, with Aldi's sales up 17% and Lidl's up 16% in the year to September 3. The discounters now capture 17.7% of the sector. Tesco saw an increase in market share from 27% in the 12 weeks to August 6 to 27.2% in the 12 weeks to September. Sainsbury's market share over the same period was flat at 14.8%. Other supermarkets to win market share include Asda and Waitrose, while the Co-op and Iceland were flat. Morrisons and Ocado both went backwards.
Grocery price inflation slows to 12.2%
The pace of grocery price inflation has eased to its lowest level in more than a year. Prices were 12.2% higher than a year ago over the four weeks to September 3. This is down on the 12.7% increase recorded a month earlier and marks the sixth consecutive decline since the 17.5% peak seen in March.
ECONOMY
Wages outstrip inflation for the first time in over a year
Wage growth has caught up with rising prices for the first time in nearly two years, according to Office for National Statistics (ONS) data. Regular pay, excluding bonuses, rose by 7.8% year-on-year in May to July, matching the inflation rate for the period. Darren Morgan, director of economic statistics at the ONS, said earnings continued to increase at record rates, while inflation has started to come down, meaning that real pay is no longer falling. Separate ONS data shows that the headline unemployment rate in the May-to-July period climbed to 4.3%, up from 3.8% in the previous three-month period. The number out of work is now just below 1.5m. At the same time, the number of job vacancies has dropped below 1m. Reacting to the ONS figures, Chancellor Jeremy Hunt said: "It's heartening to see the number of employees on payroll is still close to record highs and that our unemployment rate remains below many of our international peers." He added that while wage growth "remains high," for real wages to grow sustainably "we must stick to our plan to halve inflation."
Economy could stagnate for two years, says BoE’s Breeden
Sarah Breeden, the Bank of England’s incoming deputy governor for financial stability, says the UK faces two years of economic stagnation due to inflation. While she said the UK was not on track for a recession, Ms Breeden has warned MPs on the Commons Treasury committee that the economy would remain sluggish, saying: “I would expect relatively flat GDP in the UK over the next couple of years, as the impact of past increases in bank rate increasingly push down on demand, and supply remains very weak.” With wages growing at a faster pace than previously expected, increases in both inflation and interest rates are considered likely.