BANKING
HSBC announces 69 branch closures
HSBC will shut 69 of its UK bank branches as part of its shift toward online banking in a move that is expected to affect the jobs of around 400 staff. HSBC, which will begin closing the branches from July, said it aims to redeploy affected staff. The bank also said it will attempt to replace the branches with other banking services, adding a vow to not close any branches where it serves as the last bank in town. HSBC, which closed 82 sites last year as part of its transformation programme, says the move is in response to a shift towards online banking which has been accelerated by the pandemic. The bank says less than 50% of its bank's customers now 'actively use' a branch network and that average footfall has declined by over 50% since 2017. Jackie Uhi, head of HSBC's UK branch network, commented: "We know that the majority of our customers have a preference to do much of their day-today banking online or via mobile, so we're removing locations where we have another branch nearby and where there is a significant reduction in customers using face-to-face branch servicing." The Financial Conduct Authority said in November that the number of branches of larger banks and building societies offering personal current accounts fell by 267 between April and June 2021, leaving just 5,599 left open in the UK.
Lloyds CEO begins shake-up
Lloyds Banking Group CEO Charlie Nunn has begun a shake-up of the lender's top team, with Vim Maru, group director for retail, set to leave following a handover of responsibilities, while commercial banking boss David Oldfield plans to leave next year. This comes as Mr Nunn looks to action a new strategy that will see the bank split its three units into five. The bank plans to split its retail division into two, with one focused on consumer lending and the other on current accounts and savings. The first unit will be co-led by Russell Galley and Jo Harris on an interim basis, while the second will be headed by Jas Singh. Insurance, pensions and investments is to be headed by Antonio Lorenzo, while units focused on corporate and institutional banking will be led by Mr Oldfield until successors are appointed.
Expert review backs keeping rules on ringfencing UK retail banks
A panel led by former Standard Life Aberdeen CEO Keith Skeoch says the UK’s ringfencing regime should be kept in place but eventually be replaced by newer regulations designed to oversee banks.
Cards declined online following introduction of new rules
Concerns have been raised over new rules that require Britons to undergo additional security checks when using online banking or online shopping. The rules, which came into force on Monday, relate to the purchase of new, infrequent or high value items, with shoppers subjected to identity checks via two-factor authentication. However, some Britons have reported that their credit and debit cards have been declined online as a result, with some highlighting that older people who may not be technologically proficient will struggle to understand the rules.
INTERNATIONAL
Unicredit could pull out of Russia
Italy's second largest bank is conducting an urgent review of its business in Russia and could decide to pull out of the country after the invasion of Ukraine. Unicredit CEO Andrea Orcel said the decision was complex and could take time because of the need to support the bank's local staff and European companies which are also trying to quit the country. UniCredit indicated last week that a full write-off of its Russian business, including cross-border exposure, would cost around €7.4bn.
AUTOMOTIVE
Volkswagen poised to accelerate shift away from Europe if Ukraine war continues
Volkswagen CEO Herbert Diess has said the automaker will consider moving more of its production outside of Europe if the conflict in Ukraine continues.
FINANCIAL SERVICES
Investors increase cash reserves amid recession fears
Bank of America analysis shows that investors are increasing cash reserves in anticipation of a sustained slump in equity markets. A poll of leading global fund managers shows that they are currently more concerned about the outlook for global growth than at any time since the financial crisis. The majority of investors managing around $1trn in assets are expecting an equity bear market this year and are slashing their exposure in response. European fund managers have cut growth expectations, with 69% saying they expected the European economy to weaken over the coming year – the biggest proportion since 2011. A separate report on retail investor outlook from Hargreaves Lansdown shows that confidence across global sectors had fallen in the past month, with confidence in Europe seeing the steepest fall at 36%, while confidence in the UK has slipped 22%.
Watchdog rejects demand for bigger minibond payments
The Financial Conduct Authority (FCA) has rejected calls from the independent Financial Regulators Complaints Commissioner to pay more compensation to people who lost money in the London Capital & Finance (LCF) investment scandal. The regulator has paid £34,020 to four people who complained about the way it handled LCF. This compares with £58.3m in redress distributed by the Financial Services Compensation Scheme and £109.4m paid out by the Government from a special pot set up to compensate LCF victims. While the City watchdog has accepted some of the suggestions in a 236-page report from the commissioner, it defended its compensation decisions and warned that awarding redress to all LCF investors would set a precedent for other similar complaints.
NCA calls for tighter regulation of crypto mixers
The National Crime Agency (NCA) has called for tighter regulation of decentralised crypto mixers - protocols that enable traders to obscure transactions. The mixers break the visible link of transactions between a sender and receiver on the blockchain, making it harder for assets to be traced. While they offer traders privacy when trading on public blockchains, regulators have raised concerns about their potential for enabling illicit activity. Gary Cathcart, head of financial investigations at the NCA, said: “When it comes to crypto transactions, the owner’s identity is already obscured, and the reality is that prying eyes would need additional, hard to get information, to determine a wallet’s balance and its owner … The argument on privacy is therefore a weak one.”
FCA seeks head for new crypto division
The Financial Conduct Authority (FCA) is setting up a dedicated digital assets division as it looks to boost surveillance of digital assets amid a surge in crypto-related crime. A job post on LinkedIn reveals that the City watchdog is seeking a department head “to build and lead a new crypto department that will lead and coordinate the FCA’s regulatory activity in this emerging market.” The role will see the successful candidate responsible for “supporting innovation in the crypto sector”, “influencing future regulation” and helping to deliver the “Government’s vision on cryptoassets, influence future regulation.” The FCA has opened over 300 cases related to unregistered crypto asset businesses, many of which may be scams, over the past six months. Analysis shows that 6,372 crypto scams were reported to the FCA in 2021, up from 3,142 a year earlier.
Woodford investors face further wait
Investors in the Woodford Equity Fund may have to wait until 2023 to receive the remainder of their holdings. In a statement, the fund’s authorised corporate director, Link Solutions, said it has sold the majority of the fund’s assets, but cannot provide a specific date for the next capital distribution. As of February 28, Link has made four capital distributions to investors totalling £2.54bn. The value of the fund is now £141m, and it still holds shareholdings in Atom Bank, Benevolent AI, Drayson, Mafic, Nexeon, Origin, RM2, Rutherford Healthcare and Sabina Estates. Ryan Hughes, head of investment research at AJ Bell, said that investors need to brace themselves for a further delay in the sale of the remaining assets. “This will be extremely disappointing for investors locked in the fund,” he said, adding that it seems that little progress has been made on disposing the remaining assets in the fund since Link’s last update three months ago.”
REAL ESTATE
First-time buyer numbers almost double
First-time buyers take an average of eight years to save enough money for a deposit on their first home, new research has found. According to the Barclays Mortgages' First Time Buyer Index, the average person starts saving for a deposit at 24-years-old and buys their first home when they are 32. The research also found that the number of first-time buyers in the UK has almost doubled in the past year. However, 56% revealed that they would have struggled without support from their family. First-time buyers paid an average of £281,000 for a house in 2021, down £12,600 compared to 2020 but more than the average house price in 2019, which was £249,700. The survey also revealed potential homeowners' confusion about the process. More than 55% confessed they had no idea where to begin, while 39% didn't know they had to factor in solicitor's fees. Nearly half were unaware of stamp duty.
Ten areas see prices jump 20%
While house prices continue to climb across the UK, Rightmove has identified ten areas where annual price growth has risen by more than 20%. Based on asking prices as of February, Brixham in Devon came out on top, with the 25% year-on-year increase marking the steepest annual house price increase. Jesmond in Newcastle upon Tyne ranked in second place, with prices up 23% in a year, followed by Farnham in Surrey at 22%. Data from Nationwide shows property prices rose by 0.8% in January and 1.7% in February, while the Office of National Statistics’ latest projection suggests that prices are up 10.8% in 2021.
ECONOMY
Unemployment falls and wages climb
Office for National Statistics (ONS) figures show that the unemployment rate fell 0.2 percentage points between November and January to 3.9%. Meanwhile, the number of UK workers on payrolls rose by 275,000 between January and February, hitting a record 29.7m, while vacancies also climbed to a new high of 1.3m on the back of a 105,000 quarter-on-quarter increase. While growth in average total pay including bonuses was 4.8% in the quarter to January, regular pay increases were lower at 3.8%. Analysis shows that as the increase in regular pay did not keep up with inflation, wages fell by 1% in real terms - the steepest decline since July 2014. ONS chief economist Grant Fitzner said: “The labour market continues to recover from the effects of the pandemic, with the number of unemployed people falling below its pre-pandemic level for the first time and another strong rise in employees on payroll in February. However, the number of people out of work and not looking for a job rose again, meaning total employment remained well below its pre-pandemic level.” Chancellor Rishi Sunak commented: “I am confident that our labour market is in a good position to deal with the current global challenges, with payrolled employee numbers above pre-pandemic levels in every nation and region and redundancies at record lows."