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Daily News Roundup: Wednesday 19th May 2021

Posted: 19th May 2021


BoE tells banks to quantify climate risks

Bank of England (BoE) executive director Sarah Breeden has warned that banks and insurers are underestimating the potential impact of climate change on their business. She said it is “critical that financial firms recognise now that the race to net zero has started,” adding: “In support of their ambitions, and consistent with our expectations, they need to run climate scenarios as part of business as usual risk management and embed climate risk management within day-to-day decision-making." Saying that scenario analysis will help institutions identify companies that are boosting their green credentials, Ms Breeden noted that the Network for Greening the Financial System, a grouping of central banks, has compiled scenarios for banks to use and compare results. The BoE will launch its first climate-related stress test of banks and insurers in June.

Lloyds doubles business account charges

Lloyds has announced plans to double charges on its business accounts, telling customers it will increase the monthly fee on its Business Extra and Electronic Business tariffs which are available to firms making more than £3m in turnover. Lloyds will increase the monthly account fee for Business Extra from £7.50 to £15 in June, while the monthly Electronic Business tariff, aimed at firms which make most of their payments electronically, will rise from £12.50 to £20. The All-Party Parliamentary Group on Fair Business Banking has urged Lloyds to reverse the charges, with chairman Kevin Hollinrake saying the bank “will be fully aware of the difficulty some businesses have in changing banks, so they know business customers are pretty much sitting ducks for these huge increases”. He added that Lloyds’ board will “justifiably face charges of profiteering from the Covid crisis”.

YBS announces support initiative

Yorkshire Building Society and Citizens Advice are launching a new pilot scheme which will see Citizens Advice advisers available in branches to support members of the public with a range of issues. The initial pilot will run for nine months and will take place across six of the Society's branches from May 17, with advisers in branches for a day or two a week.


JPMorgan promotes Lake and Piepszak

Marianne Lake has been made co-head of JPMorgan's consumer and community banking unit, where she will work alongside Jennifer Piepszak. Ms Lake, a former finance chief, is currently in charge of consumer lending, while Ms Piepszak is being promoted from chief finance officer. The two women are seen as frontrunners to replace current chief executive Jamie Dimon, who has run JPMorgan since 2005. Mr Dimon said the new co-CEOs of the consumer banking business “have proven track records of working successfully across the firm and both are well known and respected within the financial industry for their exceptional character and capabilities”.

Orcel reduces Santander claim

UniCredit CEO Andrea Orcel has brought a legal case against Santander, arguing that it wrongly reversed its decision make him chief executive. Mr Orcel left UBS in 2018 to join Santander but the bank rescinded its job offer in January 2019. Mr Orcel has reduced his legal claim against Santander to about €67m, down from the €112m he initially demanded.

Germany’s highest court rejects fresh challenge to ECB

An attempt to stop the European Central Bank from buying sovereign bonds has been rejected by the constitutional court of Germany.

Lenders struggle to recoup losses after US corporate debt defaults

A new report from Moody's has revealed that lenders recouped much less from failed US firms during the pandemic than during previous economic downturns.

Bank of America increases minimum wage

Bank of America says it will increase its hourly minimum wage to $25 by 2025. It added that it will also require its vendors and suppliers to pay their employees at least $15 an hour.


City watchdog targets online fraud

The Financial Conduct Authority (FCA) has warned of the “scourge” of online investment fraud, with figures showing that the City watchdog has issued 632 specific warnings about scam firms this year – more than double the number in the same period in 2020. Analysis shows that the FCA issued 1,204 warnings in 2020, double the number recorded in 2019. Mark Steward, an executive director at the regulator, told industry bosses at the FCA Investigations & Enforcement Summit that an increase in investment scams “has become a scourge” that poses a “threat to a legitimate financial services industry”. Mr Steward cited examples where victims have been scammed out of “really significant” sums, adding: “It does dent confidence in the system … The success of scams is going to turn people off investing, and that will be damaging as they enter retirement and realise they don't have enough money.” He went on to explain that the FCA is “upping its game” against fraudulent investment scams, having increased “proactive monitoring of the internet”. Mr Steward said the regulator is getting faster at identifying suspicious adverts, issuing warnings and contacting online platforms to have the marketing removed. The regulator is urging the Government to include financial harm in the Online Safety Bill.

NatWest chair: City's 'Golden Age' is over

NatWest chairman Howard Davies has warned that the City's “Golden Age” is over, although he believes London will remain a global financial centre. He said: “Almost five years after the Brexit referendum, and five months after Britain's exit from the EU, the future of London as a global financial centre seems secure”. He added that while the City will remain Europe's largest financial marketplace, “its Golden Age as Europe's financial capital is over”.

Edmond de Rothschild plans to double assets in deals push

President Ariane de Rothschild says Edmond de Rothschild Group plans to double its assets under management and is “looking at buying asset managers and private banks, or hiring smaller teams”.


Vodafone to increase capital expenditure for network expansion

Telecoms firm Vodafone has announced the next phase in its growth strategy, amid plans to increase capital expenditure as it looks to expand its networks.


Former JP Morgan investment banker named next chairman of DCC

Sales, marketing and support services group DCC has appointed former JP Morgan investment banker Mark Breuer as chairman designate.


Tax cut added fuel to the house price fire

David Smith in the Times says there are “reasons to worry” about the extent to which house prices are rising. Reflecting on the stamp duty holiday and its role in driving activity and prices, Mr Smith calls it “one of the most unnecessary tax cuts” he can remember, saying the initial tax break made sense amid the pandemic but the Chancellor’s decision to extend it in his March Budget was “strange.” He suggests that extending the stamp duty holiday is not only costing the Treasury around £1.6bn but is counterproductive as it has driven up prices, saying this neutralises the benefit of the tax cut for many buyers and “took prices further out of the reach” of many others.

Landsec reports loss as retail holdings decrease in value

Property firm Land Securities has posted a £1.4bn annual loss driven by a £1.6bn depreciation in the value of its London offices and regional shopping centres to £10.8bn. Regional shopping centres decreased in value by 38%, while London retail property valuations were down by 26.7%.


Scottish sales slip

Research by the Scottish Retail Consortium shows Scottish retail sales are more than 15% lower than their pre-pandemic level. The study looked at sales figures between April 4 and May 1 compared to the same period in 2019, with it shown that total food sales decreased by 7.2% while sales in the non-food category were down by 22.7%.

Britvic reports half-year results

Drinks maker Britvic has reported that sales for the six months to the end of March were down almost 12% to £617.1m, while pre-tax profits declined from £53.6m to £42.7m.


Bailey predicts temporary inflation spike

Bank of England (BoE) governor Andrew Bailey believes inflation will spike “'in the next month or so”, telling the Economic Affairs Committee that the Bank expects inflation to “pick up” with the economy improving as lockdown restrictions are eased. However, he added that any rise is likely to be temporary, saying there is currently no evidence to suggest an increase will persist in the long term. Mr Bailey said that while the Bank sees a bounce back in the economy “we don’t see that sort of, in a sense, momentum continuing forward at that pace at all.” A BoE report released earlier this month said it expects inflation to climb to 2.4% by Q4 but return to around 2% in the medium term.

Bank almost hit stimulus ceiling

The Bank of England came close to hitting its quantitative easing ceiling in November 2020 after its final £150bn stimulus package rolled out amid second lockdown. Bank governor Andrew Bailey told the House of Lords Economic Affairs Committee that one of the reasons the amount was chosen was “an assessment of the headroom we had to undertake purchases, so we couldn’t have gone at that time hugely above that number”.

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