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Daily News Roundup: Wednesday, 23rd June 2021

Posted: 23rd June 2021

BANKING

CMA warns banks over transaction history failures

The Competition and Markets Authority has issued a formal warning to Monzo, NatWest, Virgin Money and Bank of Ireland for failing to send bank statements to 150,000 former customers. Competition rules require lenders to send customers a history of their current account banking activity within 40 days of closing their accounts. Adam Land, CMA senior director of remedies business and financial analysis, said: “Nearly 150,000 people were affected by these banks’ breaches, with the majority being former Monzo customers. This may have made things harder for people trying to borrow money or apply for a mortgage.”

NatWest customers livid after accounts shut

Thousands of people have had their NatWest accounts closed down with no warning, prompting fury from customers, some of whom say they have been trying to get hold of their funds for up to a year. According to data from the Financial Ombudsman, 2,800 complaints were made against NatWest regarding current accounts in the 12 months to the beginning of April, on top of 2,600 complaints the year before.

Lockdown savers stash away nearly £200bn

Bank of England figures show Britons have saved almost £200bn since the pandemic began. Households deposited an additional £10.7bn with banks and building societies in April, bringing the total deposited since 31 March 2020 to £193bn. It means savers currently have almost £1.7trn locked away in bank accounts, fuelled by record levels of savings over the past year.

UK infrastructure bank to be permanent

The Government has confirmed that the UK's new infrastructure bank will be a permanent fixture to help tackle climate change and to support local and regional economic growth. Britain's first national infrastructure bank, which aims to unlock over £40bn of investment, was opened by the chancellor in Leeds last week.

PRIVATE EQUITY

Blackstone makes further push into US housing with $6bn deal

Home Partners of America has been bought by Blackstone for $6bn, adding a portfolio of more than 17,000 homes to the private equity firm's real estate arm.

Private equity for all! The UK’s questionable pensions push

The FT’s Helen Thomas analyses Government plans for more pension fund money to be funnelled into private equity, with the high fees PE managers charge a barrier unlikely to be overcome.

INTERNATIONAL

Morgan Stanley to bar the unvaccinated from New York office

Morgan Stanley will bar staff and clients from entering the bank's New York offices if they are not fully vaccinated, a source told Reuters on Tuesday. The new policy will come into effect on July 12 and will allow removal of COVID-related restrictions on face coverings and social distancing inside office premises.

Wirecard chair’s house and office raided by German police

German police have raided the home and office of former Wirecard chair Wulf Matthias, suspecting he might have aided embezzlement by Wirecard’s management. Meanwhile, German lawmakers examining the collapse of the payment processing company have accused the country's finance minister Olaf Scholz of oversight failings.

Supreme Court issues ruling on Goldman Sachs case

The US Supreme Court has thrown out a decision by the Manhattan-based 2nd US Circuit Court of Appeals that allowed Goldman Sachs shareholders to sue as a group, with the bank having been accused of unlawfully concealing conflicts of interest during the creation of subprime securities.

AVIATION

Zero emissions pledge announced by aviation alliance

The Sustainable Aviation alliance, a network of UK airlines, airports, manufacturers and air navigation service providers, has announced 10 and 20 year targets to reduce carbon emissions.

Senior rejects Lone Star’s £840m takeover offer

Aerospace and defence group Senior has rejected a final takeover offer from US private equity firm Lone Star Global Acquisitions, describing it as “highly opportunistic”.

FINANCIAL SERVICES

EU constraining the City while it builds capacity

The Daily Telegraph says EU financial services commissioner Mairead McGuinness has admitted that Brussels is attempting to hold back the City of London while Europe’s infrastructure is improved. Ms McGuinness told the City Week conference that Brexit had “laid bare” vulnerabilities in Europe’s financial system by exposing its dependence on the City and that the EU needed to “reinforce its capacity” so the concentration of critical infrastructures located outside of the EU could be limited. She added: “Our goal is not to move or steal business away from London but rather to build our own infrastructures, and that’s an important nuance.” McGuinness went on to say that future decisions on equivalence will be made gradually and political relations would also determine the EU’s financial services policy.

New climate reporting rules to be extended

The Financial Conduct Authority has outlined plans to extend climate reporting requirements to most UK listed companies as well as money managers, life insurers and pension providers in an attempt to appease investor demand for disclosure. Sheldon Mills, FCA executive director of consumer and competition, said: “The new rules will help markets, investors and ultimately consumers better understand the impact of climate change and make more informed decisions.”

FCA to ratchet up post-Brexit checks on foreign firms

Nikhil Rathi, the head of the Financial Conduct Authority, said on Tuesday that European financial firms will be expected to pass a “rigorous review” if they are to operate in the UK. He went on to explain that since the end of the transition period, the regulator has taken action against 13 firms who are currently operating under the post-Brexit Temporary Permissions Regime (TPR). Rathi said the FCA was in the process of removing a further 120 firms from operating in the UK.

Blockchain Capital raises $300m from PayPal, Visa

Blockchain Capital has raised $300m in funding for its Fund V from investors including PayPal Holdings Inc and Visa Inc. The cryptocurrency- and blockchain-focused venture capital firm has so far invested in more than 110 companies, including cryptocurrency exchanges Coinbase Global Inc and Kraken.

HEALTHCARE

Pear Therapeutics agrees $1.6bn SPAC deal

Pear Therapeutics, the SoftBank-backed healthcare startup, has agreed to go public through a merger with blank cheque company Thimble Point Acquisition Corp valuing the business at $1.6bn.

MANUFACTURING

Manufacturing output increase reported for last three months

UK manufacturing output grew at its fastest pace ever in the last three months, the CBI's latest Industrial Trends survey reveals, with output up in 15 out of 17 sectors and volumes up 37% in total during the quarter. CBI deputy chief economist Anna Leach stated: “The rebound in manufacturing activity has gathered pace in June, with output growth accelerating to its fastest pace on record and order books their strongest in over 30 years. Encouragingly, this performance is reflected in the majority of manufacturing sub-sectors and looks set to continue in the coming quarter."

DS Smith confident despite rising cost of raw materials

DS Smith, the UK’s biggest cardboard-maker, has said it is confident it can pass on soaring raw material costs, which have led to a 37% fall in pre-tax profits to £231m in the year to April. The price of recycled cardboard has gone up from €20 a tonne before the pandemic to €200 a tonne while transport and energy prices were also on the rise. Paper is up from about €300 a tonne eight months ago to €500 a tonne. Despite the cost pressures, operating profits rose in the second half to £272m, with demand in North America especially strong.

MEDIA & ENTERTAINMENT

Channel 4 reports record profits as government considers privatisation

Channel 4 has reported record profits, with a £74m pretax surplus posted for last year. Revenues were down 5% to £934m. Chief executive Alex Mahon commented: “The Government has the right to look at [privatisation] but in any examination of it would have to be about making Channel 4 stronger. We’re here to deliver on certain aspects of government policy, in terms of growing the creative sector and speaking up for the underrepresented and how we attract young people.”

PROFESSIONAL SERVICES

Staffline losses down amid last year's manufacturing slump

Recruitment firm Staffline has reported revenues of £927m for the year to January, a decrease from £1.06bn a year earlier, and reported a widened £51.6m pre-tax loss. The company attributed the figures to "diminished" demand for workers in sectors including manufacturing last year.

REAL ESTATE

House prices climb to record levels in US and Europe

The US and parts of Europe have seen house prices hit new highs as monetary stimulus programmes continue to drive asset prices up, edging young people and middle-class families out of the market.

RETAIL

Supermarket sales fall

New figures reveals that supermarket sales fell by 1.6% in the 12 weeks to 13 June compared with the same period last year, although they were still £3.3bn higher than over the same period in 2019. Industry data shows that the number of supermarket shoppers fell by 5m in the four weeks to 13 June compared with May, as customers took advantage of the reopening of indoor hospitality, spending their money in restaurants and cafés instead.

Farmers to scrutinise impact of Morrisons bid

The National Farmers Union says it will scrutinise the impact of any potential takeover of Morrisons, following the £5.5bn bid by private equity firm Clayton Dubilier & Rice. The NFU said: "Morrisons is a significant supporter of British farming and we would like to see this continue under any new ownership."

ECONOMY

Government borrowing falls in May as economy rebounds

The Office for National Statistics said on Tuesday that public sector net borrowing, excluding public sector banks, was estimated at £24.3bn in May, £19.4bn lower than the same period last year, and an improvement on the £28.5bn forecast by the Office for Budget Responsibility. However, it was still the second highest borrowing figure for May since monthly records began in 1993. Contributing factors were a reduction in Government spending, which dropped 12% to £81.8bn in May, and higher tax revenues from a rebounding economy. Overall, public sector net debt has risen to around 99.2% of GDP in May, the highest since March 1962.

Former OECD economist joins BoE rate-setting committee

The Government announced on Tuesday that former OECD chief economist, Catherine Mann, has been appointed as an external member of the Bank of England’s Monetary Policy Committee. Ms Mann, a former White House adviser to George Bush Snr, will replace Gertjan Vlieghe in September. She quit her role as global chief economist at investment bank Citi last month and her most recent research on global post-Covid prospects signal a dovish policy outlook. George Buckley, chief economist at Nomura, said: “The departure of both Vlieghe and most obviously Andy Haldane definitely leaves the MPC with a more dovish bias.” Meanwhile, analysts think the BoE is unlikely to change its view on the risk of inflation this week but would need to demonstrate concern so as to not appear complacent about the threat.

OTHER

Retailers urged to accept cash

The Mail is calling on shops and restaurants to start taking cash again after a survey conducted by Consumer Intelligence found millions have been barred from spending with coins and notes. The poll found since non-essential shops reopened in April, one in five of consumer has been stopped from paying with cash, with 84% of those turned down by traders that took cash before lockdown in March last year. It follows a UK Finance report that found the decline of cash - to just 17% of all payments in 2020 - was accelerated by businesses trying to reduce the spread of COVID-19. Yvonne Fovargue, Labour MP for Makerfield, says: “The pandemic may well have forced most to rely on cards or internet transfers, but millions of people still use cash every day. It is simply wrong for shops to refuse or discourage the use of cash.”

More than 5m people become millionaires despite pandemic

A report from Credit Suisse reveals that the pandemic has been a boon for the rich, with aggregate global household wealth rising by about $28.7trn to $418.3tn after cheap money inflated asset prices. While many poor people became poorer, the number of millionaires increased by 5.2m to 56.1m globally. In 2020 more than 1% of adults worldwide were millionaires for the first time. Anthony Shorrocks, economist and author of the Global Wealth Report, explained that if asset price increases, such as house price rises, were removed from the analysis, "then global household wealth may well have fallen". "In the lower wealth bands where financial assets are less prevalent, wealth has tended to stand still, or, in many cases, regressed," he said.

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