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Daily News Roundup: Wednesday 21st April 2021

Posted: 21st April 2021


Banks sign up to net zero alliance

Banks and financial institutions with more than £50tn in assets have pledged to cut their greenhouse gas emissions as part of an initiative chaired by former Bank of England governor Mark Carney. The Glasgow Financial Alliance for Net Zero project is calling on the finance sector to divert investments towards low carbon infrastructure and technologies. It is also seeking to discourage high-carbon investments. The initiative, which has been put in place ahead UN climate talks due to be hosted by the UK in Glasgow in November, will see 160 companies, including 43 banks, set targets to cut the carbon content of their assets by 2030, with an overall goal of net zero emissions by 2050. HSBC, Lloyds, Barclays, Citi, Morgan Stanley and Bank of America are among the banks signed up, along with insurers including Axa, Munich Re and Swiss Re.

Capital and proprietary trading rules to be reviewed

Capital and proprietary trading rules are to be subject to an independent review chaired by City veteran Keith Skeoch. The review “presents a unique opportunity to assess the observed impacts of the regulatory regimes, intended or otherwise, for financial stability, competition, competitiveness, and the balance between these in light of the changes in the UK financial sector and wider economy,” authorities noted. Mr Skeoch writes in the FT: “Indeed, after a decade of banking reforms, it is right to consider whether ring-fencing has had its desired impact, which areas it has improved, which it has not and what, if any, unintended consequences may have flowed from it.”

Loans outside new scheme may offer better value

Banks outside the Government's new mortgage guarantee scheme could also provide assistance to first-time buyers with small deposits, with Kate Davies of the Intermediary Mortgage Lenders Association noting that many of the non-Government-backed 5% deposit products which have recently been launched “may well represent better value for borrowers." Mark Harris, of mortgage broker SPF Private Clients, said: "Rates on 5% deposit deals are looking more competitive as more lenders enter the market. However, it is worth noting that if there is an option to find another 5% deposit, then rates start from 3% for a two-year fix and 3.3% for a five-year fix."

Mortgage holidays may open borrowers up to extra scrutiny

Brokers say borrowers who deferred mortgage payments face extra questions when they come to apply for a new mortgage. UK Finance figures show that 2.7m people took advantage of the scheme rolled out to ease pressure amid the pandemic. The Financial Conduct Authority’s Financial Life Survey found that 70% of those who delayed payments would have struggled without doing so, with the Mail’s Helen Crane noting that this suggests nearly a third of borrowers who took a mortgage holiday could have done without it.

Blockchain partnership announced

Over 400 banking and open banking APIs are to be connected directly to blockchains under a development partnership announced between the Open Bank Project (OBP) and developer AP13. OBP CEO Simon Redfern remarked: “Hopefully, this will serve as a framework for financial regulators to explore and create new standards and set the foundation for the blockchain economy to converge with banking-based digital offerings.”


CVC steps back from plans to take Toshiba private

CVC Capital Partners is to step aside in a bidding war for Toshiba following the resignation of the Japanese firm’s chief executive Nobuaki Kurumatani.


Absa CEO steps down

Daniel Mminele, CEO of South African bank Absa, has stepped down, with CFO Jason Quinn stepping in on an interim basis. Mr Mminele said it is “regrettable that we should have had to part ways so soon on our journey” but stressed the importance of the CEO being “in complete alignment with the board on critical issues such as strategy and culture.”


Kier sells housebuilding arm

Government contractor Kier’s housebuilding arm has been acquired by private equity investor Guy Hands in a £110m cash deal. Mr Hands said in a statement: “We believe the business, under a new, refreshed brand, has significant growth potential, and can play a critical role in delivering much-needed housing in communities across the UK.”


FCA warns social media sites over investment offers

The Financial Conduct Authority (FCA) has warned social media sites over investment offers, with the City watchdog saying it may take action unless firms address the fact that often inexperienced consumers are regularly exposed to risky and sometimes fraudulent investments on their platforms. The regulator has expressed concern over DIY investors taking big financial risks when investing in cryptocurrencies and foreign exchange trading. FCA chief executive Nikhil Rathi said big internet companies “need to take greater responsibility” for their role in connecting consumers with investment opportunities that too often prove “too good to be true”. He went on to say search engines and social media platforms should face the same standards as more traditional media, arguing: “If these platforms choose to display, and profit from, adverts for risky – and in some cases fraudulent – investments, they should also comply with financial promotions rules.” "Consumers shouldn’t be subject to lower standards, or greater risks, because they find an investment online,” he added. Mr Rathi also urged ministers to provide better financial protection for consumers online.

Advisers see modest FCA fee increase

Financial Conduct Authority (FCA) fees have risen once again this year, but advisers have said they are relieved that it is only a marginal increase and broadly in line with inflation. The amount advisers are expected to contribute towards the FCA is to rise by 1.5% to £82.3m next year, while overall, the FCA’s budget is going up by 4.5% to £616.5m. Simon Harrington of trade body Pimfa said given the circumstances it was welcome that the FCA has “sought to take a proportionate approach to fees”.

FCA’s Delfas lands FOS role

Nausicaa Delfas, an executive director at the Financial Conduct Authority, will next month become interim chief executive of the Financial Ombudsman Service. She will replace Caroline Wayman, who is leaving the ombudsman after seven years as chief executive. Ms Delfas, who will run the service while its board recruits a permanent successor to Ms Wayman, will be the body’s chief ombudsman.

Lloyd’s looks to Manchester for hub

Lloyd’s of London has announced plans to establish a Manchester hub, with chief operating office Jennifer Rigby saying it is “an important next step for Lloyd’s and our digital ambitions.”

Berkshire directors rebuked over pay for likely Buffett successors

Shareholder adviser ISS is protesting Berkshire Hathaway’s executive pay policies, recommending that investors withhold votes from four directors at the firm.


Investor backs GSK CEO

A top-20 shareholder has insisted GlaxoSmithKline CEO Emma Walmsley should be given time given time to deliver a shake-up at the pharmaceuticals firm. The investor’s comments came amid speculation that Ms Walmsley may be forced out after activist investor Elliott Management took a stake in GSK, with the fund having a track record of aggressively pursuing change in boardrooms and company strategies.


Pension property wealth rises by £8bn

Pension-aged savers have seen their property wealth rise by a collective £8bn, according to new research from equity release adviser Key. According to Key's analysis, over-65s saw their property wealth increase by more than £561 a month as the housing market continued to surge thanks to the stamp duty changes and initiatives to help first-time buyers. Since Key started analysing the mortgage-free property wealth of the over-65s in 2010, homeowners have seen growth of 58%. In total, property wealth owned by over-65s who have paid off mortgages is valued at £1.232trn.


Primark raises lost sales estimate

Operating profit at Primark fell 90% to £43m in H1 and the discount fashion retailer increased its estimate of the sales that will be lost due to trading restrictions in H2. In a statement outlining its performance in the 24 weeks to February 27, parent firm Associated British Foods said that although many of its Primark stores in England have set trading records since reopening on April 12, trading in Europe has been “mixed”. As a result, it expects to forgo some £700m of sales in the second half, up from an earlier estimate of £480m. Overall, ABF made a pre-tax profit of £275m, compared with £298m in the year-earlier period, while revenue fell to £6.31bn, from £7.65bn.


Premier League teams withdraw from ESL

All six Premier League teams involved in the European Super League have formally withdrawn from the controversial competition. Manchester City were the first club to pull out, although Chelsea had earlier signalled their intent to do so. Arsenal, Liverpool, Manchester United and Tottenham have all followed suit. Uefa president Aleksander Ceferin welcomed the reversal, calling for all parties to “rebuild the unity that the game enjoyed before this”.


Unemployment falls to 4.9%

Office for National Statistics data shows that the UK’s unemployment rate fell to 4.9% in the three months to February, with this marking a slight improvement on the 5% recorded in the three months to January. While the headline jobless rate declined, the ONS data shows that the number of workers on company payrolls fell by 73,000 in the three months to the end of February, with young people hardest hit as employment among those aged 18 to 24 fell by 5.1%, quarter-on-quarter. Separate data from HMRC shows that as many as 4.7m jobs remained furloughed at the end of February. Meanwhile, analysis suggests the number of job adverts placed online increased in March and early April, with this attributed in part to the easing of lockdown restrictions that have seen non-essential stores and parts of the hospitality sector reopen.

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