JP Morgan's digital retail bank Chase launches in UK
Several papers report on the launch of JPMorgan’s new digital retail bank, Chase which many believe will put pressure on British incumbents such as Lloyds, Barclays, NatWest and HSBC which are already battling low interest rates and their smaller digital rivals. Chase is offering customers 1pc cashback on debit card spending for their first year and 5% interest on "small change round-ups". The latter will take place when a customer uses their debit card to make a purchase and the amount deducted from the account is rounded up to the nearest pound. The difference is then deposited into a savings pot where it will earn interest at 5% for 12 months. "We have been watching in which markets customers are really ready to do their banking primarily through digital channels, and the UK frankly leads the way in this respect" said Sanoke Viswanathan, chief executive of the new Chase bank venture. "This is a business that we are building not just for the UK but hopefully for the rest of the world, and there is a great confluence of talent here across the different product functions, so it's a great place to build a global headquarters for this new business," he added.
Post-Brexit ring-fencing adjustments mulled
The Times reports that the Treasury has appointed Keith Skeoch, the former Standard Life Aberdeen chief executive, and an independent panel to consider changes to banks’ ring-fencing rules. Mr Skeoch is due to report back this year or early 2022, but there are expectations that the Treasury “might drop some hints sooner about its thinking in an effort to present a wide-ranging post-Brexit plan.” The paper’s Katherine Griffiths says ring-fencing has trapped hundreds of billions of pounds inside the operations of big banks, which they are deploying into ultra-low mortgage loans as they cannot put the money to work in big commercial loans or investment banking activity. That has created a price war in home loans and made it harder for small lenders to compete.
British Business Bank seeks more regional development funds
The British Business Bank wants the Chancellor to increase its regional development funding to support the Government’s “levelling up” agenda. It also wants to extend the start-up loan programme. The Times reports that the agency reported a gain on its investment assets of £223m this year, up from a loss of £3m last year, largely thanks to rapid growth in the value of equity stakes in promising technology businesses.
Revolut to launch commission-free retail trading in US
UK fintech company Revolut is to launch of commission-free stock trading for US customers. “We are building a single app where people can manage all aspects of their finances, from banking and foreign exchange to cryptocurrency and stock trading”, said Nik Storonsky, Founder & CEO of Revolut. “We're eager to break down common barriers to entry around stock trading such as account minimums and complex interfaces,” he added.
MarketFinance enrols as UK Covid recovery lender
MarketFinance has raised £280m debt and equity in its latest fundraising round. The move comes as the business lender gears up to provide loans to UK firms as they recover and grow post-pandemic through the Government's Recovery Loan Scheme (RLS).
Draft capital rules make cryptoassets too costly to trade, banks say
The proposed capital rules for banks holding cryptoassets on their books from the Basel Committee on Banking Supervision could block lenders from competing in the sector, industry bodies have said. In a letter to the Committee, they asserted that more banking involvement would help make the underlying blockchain technology more widely available and bring "tangible benefits for the real economy.”
Regulators lack understanding of digital marketplaces
The European Union's banking watchdog said on Tuesday that regulators need a framework for identifying risks connected with banks setting up digital marketplaces. “The vast majority of competent authorities currently have a limited understanding of platform-based business models," EBA said.
Credit Suisse mulls changes at Asia investment banking unit
Credit Suisse is looking to consolidate its Asian investment banking operations into its global securities and advisory business. The move is part of a wider overhaul put into motion by Chairman Antonio Horta-Osorio in an effort to turn around the Swiss bank.
Piraeus in talks to sell leasing portfolio
As part of efforts to clear non-performing loans from its balance sheet, Piraeus Bank, one of Greece's four largest lenders, is in talks with Bain Capital to sell a portfolio of leasing contracts.
Japan's regulator to oversee Mizuho computer system
Japan’s Financial Services Agency has announced that it will oversee system management at Mizuho Financial Group as part of administrative action against the banking group following a series of technical failures.
Female candidates surge in financial services
According to data from recruitment company Core-Asset Consulting, the relaxation of COVID-19 restrictions, coupled with a more flexible approach to hybrid working, has seen more women than ever apply for jobs in UK financial services. The firm’s annual Salary Guide for the Scottish financial services sector had predicted a lack of childcare and home schooling would hamper women with young children – particularly those in senior management positions. However, nearly half of candidates registering in the last quarter have been women, in contrast to the previous quarter which saw women fall back from applying, with just 35% of total applicants being women.
Fintech start-up Pipe launches in Britain
A US start-up led by a British entrepreneur that lets businesses sell their recurring revenues on its platform has launched in the UK. Pipe, which was valued at $2bn when it raised $250m in May, combines the principles of invoice and contract finance with peer-to-peer lending across a slick trading platform. The institutional firms using Pipe’s platform offer businesses a percentage of their projected annual recurring revenues as a lump sum, typically between 30% and 50%. The value of those annualised revenues are discounted by 2%-8%.
Losses increase at PensionBee
Losses at retirement savings app PensionBee more than doubled during the first half of the year. Pre-tax losses soared by 145% to £12.8m as the firm ploughed cash into marketing and a new data platform. Its customer base rose by four-fifths to 538,000, while assets under administration jumped 117% to just under £2bn.
UK biotech firm makes diabetes breakthrough
Cambridgeshire-based biotech firm Arecor has discovered a new way to deliver insulin, marking a technical breakthrough that could change the lives of people with type-two diabetes. Shares in Arecor surged by a third to 331p with analysts saying, "it is better than even the most positive outcome we had anticipated". The company listed on the Aim in June, raising £20m.
LEISURE & HOSPITALITY
American bookmaker makes move for Entain
US sports betting company Draftkings has approached FTSE 100 bookmaker Entain about a possible takeover. The move values Entain at about £16.4bn. It is understood that DraftKings would buy Entain’s non-US assets - including its 1,500 betting shops - leaving MGM Resorts to buy Entain’s 50% share of its American joint venture.
Manufacturers report rising new orders
The Confederation of British Industry's monthly manufacturing order book balance rose to +22 in September from +18 in August, its highest level since records started in 1977. However, global supply chain problems and labour shortages held back growth in output. "Today's survey highlights how amidst a variety of supply challenges, companies are beginning to struggle to meet high demand," CBI deputy chief economist Anna Leach said. "Despite close to half of manufacturers surveyed reporting order books above normal, output growth has slowed sharply, albeit remaining relatively robust."
Property transactions rose almost a third in August
Property transactions were up by almost one third in August, according to official estimates. The provisional seasonally adjusted estimate of residential transactions in August was 98,300 - 32% higher than July, HMRC data has revealed. The number of transactions was also 20.8% higher than August 2020.
August borrowing figures higher than predicted
According to the Office for National Statistics, the Government borrowed £20.5bn last month, £5.5bn less than the same time last year but still the second-highest August on record. Analysts had predicted £15.6bn in borrowing for the month. Economists now think that borrowing is set to come in around £25bn below the £233.9bn predicted by the Office for Budget Responsibility (OBR) for this year, but the Treasury had to borrow more than predicted in August to cover rising interest on the national debt. Danni Hewson, an analyst at AJ Bell, said: “Although the numbers are going the right way, borrowing figures overshot expectations. Interest payments on all that debt shot up, and September will be even more painful when you factor in the latest retail price inflation figures.”
OECD downgrades UK growth forecasts
The OECD has downgraded growth forecasts for the UK this year from 7.2% to 6.7%, and dropped its forecast for 2022 from 5.5% to 5.2%. The organisation also nearly doubled estimates for inflation to 2.3% this year and 3.1% next year - although it suggested the effects are likely to be temporary. The UK is still expected to be the fastest-growing G7 nation this year after taking the biggest hit from Covid. Globally, the recovery remains very uneven, the OECD said, “with strikingly different outcomes across countries.”
UK’s first “green” gilt raises £10bn
The UK Government sold £10bn of its first “green” bond on Tuesday, after attracting a record £100bn worth of bids from investors. The launch of the new 12-year gilt maturing in July 2033 marks the biggest single sale by a sovereign issuer, topping the previous Є8.5bn record set by Italy in March. Proceeds from the sale will be ring-fenced for projects such as clean energy, and will also help the Government burnish its green credentials before it hosts the United Nations COP26 climate conference in Glasgow in November.