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Daily News Roundup: Wednesday, 1st December 2021

Posted: 1st December 2021

BANKING

TSB to close another 70 branches by July

TSB has announced that a further 70 branches are to shut by the end of June, with this coming as part of a significant closure programme. The move means the bank, which had 475 branches just over a year ago, will have just 220 by the middle of next year. The bank, which said the pandemic has accelerated the use of digital banking instead of branches, said that it intends to introduce more 'pop-up' services in communities where it will take customers longer to get to a branch. It is noted that while 150 staff will be affected by the latest round of closures, they will be offered alternative roles. Robin Bulloch, TSB's chief customer officer, said: "Closing branches is an incredibly difficult decision to take, but we have to respond to the changes in the way people bank," adding: "We have a significant investment programme to upgrade branches to better suit customer needs." Sharon Graham, general secretary of the Unite union, has questioned the decision to close more branches, saying: “TSB axing a quarter of its branches in 2022, on top of the numbers already closed, is a bitter blow for many communities.”

FCA publishes mortgage prisoner review

The Financial Conduct Authority (FCA) has published the findings of its Mortgage Prisoner Review, with it revealing that there are 47,000 mortgage prisoners in Britain trapped on a higher than necessary interest rate and unable to remortgage. The review shows that 94% of mortgage prisoners were on variable rates, meaning they would pay even more if the Bank of England's base rate were to increase. The probe found that 36% of mortgages are on a standard variable rate, 30% on a base rate tracker, and 27% on a Libor tracker – with all of these borrowers liable for an immediate rise in mortgage payments if the base rate increased. Data shows that across the mainstream mortgage market, 73% of borrowers are on fixed rates, protecting them from rate rises until the fixed term ended. The average rate among mortgage prisoners is 4.3%, while Defaqto analysis shows that the average rate for a two-year fixed mortgage is 2.29%. The FCA review shows that 53% of mortgage prisoners are on interest-only mortgages, compared to 9% in the active market. The FCA calculates that there are 195,000 borrowers who have mortgages with inactive lenders. However, it said most of these were not mortgage prisoners by its definition, noting that the 34,000 who had missed mortgage payments and 18,000 who were near the end of their mortgage were not considered mortgage prisoners as they would not be able to switch lender. It added that there were a further 96,000 who would not get a better deal by switching, as they were on a “low rate for their circumstances”.

Revolut chief hopes for UK banking licence by start of 2022

Revolut CEO Nik Storonsky hopes the digital banking app will secure a UK banking licence early in 2022, adding that it plans to submit a full US banking licence application in Q1.

INTERNATIONAL

Westpac pays out over charging dead people

Australian bank Westpac has admitted to breaking the law following lawsuits by regulators over its poor treatment of customers, including charging fees to dead people. One of six investigations found that the bank charged more than $7m in fees over a 10-year period to more than 11,000 "deceased customers for financial advice services that were not provided due to their death." It will pay $81m in penalties and hand $57m of compensation to customers. The Australian Securities and Investments Commission said Westpac must urgently improve its "poor compliance culture", with the regulator’s deputy chair Sarah Court saying: “The conduct and breaches alleged in these proceedings caused widespread consumer harm and ranged across Westpac's everyday banking, financial advice, superannuation and insurance businesses.”

UBS launches digital gold trading

UBS has launched physical gold trading for Swiss customers via its mobile banking app. Customers can trade amounts as small as 0.1 grams, or roughly 5 Swiss francs at current prices, up to 2 kilograms, or roughly 100,000 Swiss francs. A source familiar with the project said digital gold trading may be expanded internationally in the future.

AVIATION

EasyJet says Omicron has weakened bookings

EasyJet says it expects passenger numbers to return to pre-pandemic levels next summer despite uncertainty as coronavirus restrictions grow across Europe and amid early signs of a weakening of bookings in response to the emergence of the Omicron variant. The carrier reported a loss before tax of £1.14bn for the year to end-September, compared to a £835m loss the year before. CEO Johan Lundgren said the airline's restructuring during the collapse in air travel at the height of the pandemic meant it was well placed to handle any further disruption.

FINANCIAL SERVICES

FCA plans could see regulatory minimum fees almost double

The Financial Conduct Authority (FCA) is proposing to increase its minimum fees by more than 90% in the next year. This comes after fees were frozen for two years to help protect the smallest firms amid the pandemic. Under the FCA’s regulatory fee and levies proposals for 2022/23, the minimum fee firms pay to be regulated will increase from £1,151 to £2,200, with this applying to the A fee-block which collectively account for 83% of the City watchdog’s annual funding requirement. The fee increase means the A block will contribute about £41.5m of the £50m of total fees, compared to the current £21m. Analysis shows that around 37% of firms in the A fee-blocks pay minimum fees only. The FCA said that higher fees would better reflect the cost of supervising 51,000 firms and would pay for investments as it seeks to become a “more innovative and assertive regulator”. Liz Field, chief executive of Pimfa, a trade body for investment managers and financial advisers, said the increase would “come as a shock for smaller advice firms, who may rightly question the timing of the fee increase given current economic conditions and having struggled to survive the pandemic”.

CEO told hiring tax advisers would be a wise move

Directors at money transfer company Wise have told co-founder and chief executive Kristo Käärmann to hire professional advisers after he was fined for defaulting on his taxes. Following the £365,651 fine, which was handed out by HMRC after Mr Käärmann failed to heed repeated reminders to pay a tax bill, Wise conducted a "thorough review" and the board has recommended that the CEO appoint tax experts to help manage his finances.

Activist investor pushes Glencore to spin off coal business

Hedge fund Bluebell Capital Partners has called on commodities firm Glencore to spin off its thermal coal business, divest non-core assets and enhance its corporate governance. In a letter to the miner and trader’s top management, Bluebell said: “Due to its coal business, Glencore is not an investible company for investors who place sustainability at the heart of their investment process.” It also warned that mounting pressure on financial institutions to reduce lending and equity underwriting to the fossil fuel industry would also risk Glencore’s future access to capital.

UK pensions regulator signs off on first ‘superfund’

Clara Pensions has become the first superfund to win regulatory approval from the Pensions Regulator. Superfunds are a consolidation vehicle designed to run traditional pension schemes, pooling defined benefit pension funds.

HEALTHCARE

Sensyne fined after misleading adviser over bonuses

Healthcare technology company Sensyne has been fined and censured by the London Stock Exchange for “serious failures” relating to the secret payment of £1m in executive bonuses. It was found that Sensyne misled Peel Hunt, the company’s nominated adviser, over cash bonuses of £850,000 to former business minister Lord Drayson, the firm’s founder, chief executive and largest shareholder, and £200,000 to Lorimer Headley, its chief financial officer at the time. The bonuses were paid in December 2018, four months after Sensyne floated on London’s junior market, but were not referred to in the company’s admission document for investors before the listing. The exchange agreed that a fine of £580,000 should be discounted to £406,000 because of an early settlement.

GSK poaches key vaccine executive from Pfizer

Philip Dormitzer has left Pfizer to join GSK as global head of vaccines research and development. He played an important role in the development of Pfizer’s Covid-19 vaccine.

LEISURE & HOSPITALITY

Wetherspoon boss hits out at shareholder

JD Wetherspoon boss Tim Martin has hit out at shareholder Fidelity amid accusations of hypocrisy over the investment firm's opposition to the reappointment of directors to the pub chain's board. Earlier this month Mr Martin criticised Fidelity for voting against the re-election of Debra van Gene and Sir Richard Beckett, a move he called a "box-ticking approach" to corporate governance. Fidelity voted against the re-elections on the basis the non-executive directors had exceeded the UK Corporate Governance Code's nine-year rule. Mr Martin has now told Fidelity they should “practice what they preach”, saying it is "impossible" to ascertain the length of service of Fidelity's board members “because this information does not appear to be available on their website”.

RETAIL

Convenience store cashback scheme to be extended

A scheme which allows shoppers to get cashback at convenience stores without being required to make a purchase is set to be available in 2,000 shops across the UK. The scheme, which aims to offset the impact of ATM closures, initially began as a small trial, and is currently available in 900 stores. The initiative is backed by cash machine network operator Link, and enables people to withdraw any amount between 1p and £50. The average withdrawal during the year-long trial was £27.81. 

ECONOMY

CBI: Services sector sees record cost inflation

Confederation of British Industry (CBI) figures show that costs in the services sector are rising at the fastest rate in over 20 years, with quarterly analysis showing the quickest growth in costs for both business and consumer services companies since the survey began in 1998. While average selling prices are expected to rise by a record amount, profit growth for services firms is expected to stall over the coming three months due to the rise in costs. While sentiment in the sector was up in the three months to November, it climbed at a slower pace than the preceding quarter. Business volumes continued to grow at a strong pace, however, there were signs of slowing growth, with firms expecting volume growth to ease in the next quarter. The CBI report also highlights the fastest rate of hiring by business and professional services companies since 2015. CBI economist Charlotte Dendy commented: “Record growth in costs is threatening to put a winter freeze on the service sector recovery next quarter.”

OTHER

Business confidence dips in November

Analysis from Lloyds Bank shows that business confidence dipped by three points to 40% in November, although it remains above the annual average. Nine out of the 12 UK regions and nations saw confidence decline, with Wales, the South East and East of England the only places to register an increase in confidence. The Lloyds Bank Business Barometer also saw a record 50% of businesses say they plan to raise prices. It was also found that a quarter of firms expect to raise pay by 3% or more over the next 12 months amid staff shortages across multiple sectors, while 48% plan to increase staffing levels over the next 12 months. Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said that while business confidence “remains robust above the long-term average”, it dipped in November as “economic optimism and trading prospects were affected by the persistence of rising costs and supply chain issues.”

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