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Daily News Roundup: Wednesday, 15th June 2022

Posted: 15th June 2022

BANKING

FCA proposes tougher curbs on branch closures

The Financial Conduct Authority (FCA) is planning tougher curbs on bank branch closures, saying banks and building societies will have to provide greater justification for closing a branch or cutting opening hours. In September 2020 the City watchdog issued guidance to banks on how they should approach any branch closures but has now warned that some have "fallen short" of what they should be doing. The FCA is proposing a tougher version of the guidance to include partial branch closures, such as reduced hours and reduced services. In a statement the regulator said: “We know that in some cases firms make decisions to close branches that are still being used by significant numbers of customers. We have also seen firms making decisions to remove facilities such as counter services from branches, or to permanently and significantly reduce the hours that branches are open." Sheldon Mills, executive director of consumers and competition at the FCA, said: "We expect firms to continue to offer easy and accessible banking services to their customers, and this is even more important as the country faces a cost-of-living crisis.” Analysis shows that 214 bank branches have closed so far this year in the UK, with a further 272 scheduled to shut by the end of December. An FCA poll in 2020 found that 27% of adults with a day-to-day accounts regularly used a branch. One in six had a branch they previously used regularly close down in the previous 12 months.

Barclays and DIT bid to boost UK exports

Barclays has agreed to a five-year partnership with the Department of International Trade in a bid to help boost British exports. Barclays will create a 'Small Business High Value Exporters Pilot' programme for businesses and will work with the department to help provide advice on selling overseas. James Binns, global head of trade and working capital at Barclays, said economic modelling showed that a “global preference for goods ‘Made in Britain' could be worth an additional £3.5bn per annum to British firms”.

INTERNATIONAL

China regulator denies foreign bank pay claims

China's securities regulator, the China Securities Regulatory Commission (CSRC), has denied that it has held meetings asking foreign investment banks to report pay details of senior executives and reduce pay. Responding to reports relating to meetings in Shanghai and Beijing, the regulator said they were “not factual.” "The CSRC fully respects the discretionary business decision-making of financial institutions," the regulator said. Bloomberg had reported that banks including Goldman Sachs, Credit Suisse and UBS were asked to reduce cash compensation and extend deferred bonuses to three years or more.

Credit Suisse banker used messaging apps to talk to clients

Credit Suisse has removed a senior banker from his role after he communicated with clients using WhatsApp-style messaging services. Anthony Kontoleon, Credit Suisse's global head of equity capital markets syndicate in New York, left his position in April after the bank found that he used personal messaging apps to speak with clients.

UniCredit boss: Giving away Russian unit would be morally wrong

UniCredit CEO Andrea Orcel says giving up the Italian bank's Russian arm for free would be morally wrong. He said: “Writing it off and gifting it is not consistent with sanctions and is, in our opinion, not morally correct.”

Monte dei Paschi names new CFO

Italian state-controlled bank Monte dei Paschi di Siena has named veteran UniCredit executive Andrea Maffezzoni as its new chief financial officer.

AUTOMOTIVE

EV car subsidies dropped

The Government has scrapped its last remaining subsidies for electric cars, arguing the move will free up funds to expand the charging network and support other battery-powered vehicles. The £300m plug-in car grant scheme is now closed to new orders. The money will instead be directed towards extending plug-in grants to encourage sales of electric taxis, vans, trucks, motorcycles and wheelchair accessible vehicles, as announced in last year’s autumn statement.

FINANCIAL SERVICES

FOS proposes changes to levy funding structure

The Financial Ombudsman Service (FOS) has proposed changes to its compulsory jurisdiction (CJ) and voluntary jurisdiction (VJ) levies, as well as its case fee structure. In a consultation paper, the FOS said currently, the CJ (£106mn) and VJ (£0.7mn) levies are not designed to recover specific costs, such as staffing and property. In setting the CJ levy for a financial year, the FOS has previously aimed to raise 44% of its income from the levies and 56% from case fees, as per its 2022/23 budget. It has now proposed that the CJ levy should recover its fixed overheads - such as IT, property and other support functions - rather than cover a particular proportion of its income. It said the move “will bring more transparency and certainty” to its funding model.

House of Fraser pension scheme sold

Specialist insurer Pension Insurance Corporation (PIC) is set to take over the House of Fraser pensions scheme in a deal worth £600m. The retail group collapsed into bankruptcy in 2018 and was later bought by Mike Ashley's Sports Direct. Under the new deal, ownership of the pension scheme, which covers 5,050 current pensioners and 3,850 others, will be transferred from the UK's government created Pension Protection Fund onto PIC.

LEISURE & HOSPITALITY

Bank lending to hospitality falls as CBILS and BBLS end

Outstanding bank lending to small businesses in the hospitality sector has fallen by more than £1.4bn since the end of the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS). Bank lending dropped to £14.6bn in April 2022, down from £16.08bn in March 2021. There was also a 4.6% drop in bank lending to the retail industry in the past 12 months following the end of the Government-supported lending schemes, from £22.1bn to £21.1bn. Overall bank lending to SMEs fell 3.9%, from £216bn in March 2021 to £207.5bn in April 2022.

Hospitality job vacancies reach record high

Hospitality businesses face the possibility of staff shortages over the summer season, after ONS job figures showed that vacancies in the sector rose to a new record of high last month. More than a tenth of the UK's overall 1.3m job vacancies were in the hospitality sector, at 174,000. Sector bosses have recorded 83% more vacancies over the three months to May than over the same period before the pandemic, in 2019.

Ladbrokes owner eyes Dutch deal

Entain, the gambling operator behind the Ladbrokes and Bwin brands, is acquiring BetEnt, the owner of BetCity, amid delays securing regulatory approval from the KSA, the Dutch gaming and gambling authority. Entain is buying BetEnt for an initial sum of €300m, plus a deferred amount of up to €550m.

REAL ESTATE

Homeowners face mortgage payment hike

Millions of homeowners face higher mortgage payments this year as a result of interest rate rises, with the average fixed rate set to go up by almost £200 a month. While the Bank of England is expected to raise rates by as much as half a percentage point this week, taking them to 1.5%, the Government is not planning to offer any targeted support to borrowers. UK Finance data shows that 1.3m fixed-rate mortgage deals are ending at some point this year, forcing borrowers to refinance at a higher rate. There are also nearly 1.9m people on a variable or tracker mortgage, which move automatically in line with interest rates. With rates at 1.5%, the average fixed-rate borrower will have to pay around £190 extra a month to service their mortgage, according to UK Finance calculations.

RETAIL

Missguided shoppers will not get refunds for returns

Shoppers left out-of-pocket after Missguided failed will not get their money back, administrators winding up the fashion brand have warned, revealing that the company will not be able to honour refunds to customers.

ECONOMY

UK economy ‘will grind to a halt' and then shrink, BCC forecasts

Britain's economy will “grind to a halt” before shrinking in the second half of this year as soaring inflation and tax rises take their toll, according to forecasts from the British Chambers of Commerce. It downgraded its outlook for growth next year to 0.6%. Analysts said the forecasts were likely to spook consumers and depress the housing market, which has slowed markedly in recent months. A further squeeze on consumers is expected to come from higher interest rates, which the Bank of England will impose to limit the rise in prices. The BCC said the central bank's base rate would rise to 2% by the end of this year and 3% in 2023, pushing mortgage rates to levels not seen since before the 2008 financial crash.

Unemployment rate rises to 3.8%

Unemployment rose to 3.8% in the three months to April from 3.7% in the three months to March, marking the first increase since the closing quarter of 2020. The Office for National Statistics (ONS) data also shows that the employment rate rose to 75.6% but still remains below pre-pandemic levels because of a decline in self-employment. The figures also revealed that the number of vacancies has risen to a record high of 1.3m. Meanwhile, HMRC data shows that the number of employees on company payrolls rose by 90,000 in May to a record high 29.6m.

Real wages fall to 20-year low

Figures from the Office for National Statistics (ONS) show annual growth in regular pay, excluding bonuses, fell by 4.5% in April after adjusting for inflation – the biggest fall since comparable records began in 2001. Average total pay, including bonuses, fell by 3.7% on the month after taking account of inflation as measured by the consumer price index. Over the three months to April, real wages fell 2.2%, with this the steepest quarterly drop in a decade. However, pay including bonuses is outpacing price rises, rising by 0.4% when taking inflation into account.

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