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Daily News Roundup: Wednesday 24th February 2021

Posted: 24th February 2021

BANKING

HSBC pledges to slash office space by 40%

HSBC has announced that it will cut about 8.6m sq ft of office space as the pandemic ushers in a new era of flexible working. In London, CEO Noel Quinn said its Canary Wharf building would be maintained, but secondary premises elsewhere in the capital will be released when their lease comes up for renewal. The bank’s pledge to slash office space comes as it unveiled plans to invest an extra $6bn in Asian markets such as China and Hong Kong over the next five years. HSBC also said that it would cut more jobs in addition to a previously announced plan to scrap 35,000 roles, but did not offer details. The bank reported profit before tax of $8.78bn (£6.24bn) for 2020, down from $13.35bn a year earlier. Dividends will be restarting beginning with a 15 cent-per-share cash payment. Meanwhile, an FT editorial posits that HSBC’s pivot to China is a recognition of the country’s decoupling from the west, something more businesses will be forced to wrestle with. The paper’s Lex column suggests Quinn goes further and spins off the UK retail and commercial unit.

EU pressures banks over clearing

The European Commission has ordered major banks to explain why they are not moving euro derivative trading activity out of London as fresh battle lines are drawn between Britain and the EU over financial services. A questionnaire sent to European banking leaders asks them to explain their views on shifting euro derivatives to the Continent so the European Commission “is aware of all possible impediments, obstacles and opportunities”. The document also reportedly asks firms to reveal which types of derivatives would be easiest to clear in the EU instead of Britain.

BoE directors backed Bailey despite FCA failings

The Times reports that the independent directors responsible for governance at the Bank of England gave their backing to governor Andrew Bailey after they were made aware of a report criticising his performance at the Financial Conduct Authority. Official minutes reveal the directors “acknowledged Andrew Bailey’s outstanding performance since taking over as governor at a moment of national crisis, and expressed full support for him.”

NatWest issues €1bn affordable housing bond

In the first move of its kind by a UK bank, NatWest is issuing a €1bn affordable housing bond, the proceeds of which will be allocated to non-profit housing associations which provide access to affordable housing. The bond is the third issued under NatWest’s Green, Social or Sustainability framework.

Scots challenger bank launches £5m funding round

The Scottish challenger bank backed by industrialist Jim McColl, Alba Bank, has launched a £5m funding round as it gears up to become operational this year. It aims to fill a gap in the market to support UK-based SMEs “develop their aspirations to grow and realise their potential”.

Hampden & Co bolsters board

Edinburgh-based private bank Hampden & Co has appointed Caroline Taylor, who has a background in investment management, including global markets, regulation and risk management, a non-executive director and chair of the bank's remuneration committee.

Libor legal action against Barclays bank thrown out

A legal claim against Barclays led by eight councils over bank loans they alleged were affected by the Libor rigging scandal has been thrown out by a High Court judge who concluded they would not be successful at a trial.

INTERNATIONAL

Wells Fargo agrees sale of asset management arm to private equity for $2.1bn

Wells Fargo Asset Management is to be sold to GTCR and Reverence Capital for $2.1bn, after Wells Fargo pledged to cut its annual cost base by $8bn by 2024.

Berlin threatens to ditch audit watchdog as compliance row escalates

The German government is threatening to scrap the country’s accounting watchdog, the Financial Reporting Enforcement Panel, amid questions over its handling of fraud allegations against Wirecard and compliance of senior staff.

South African bank challenger Tyme to launch in Asia

Tyme has raised $110m from investors to expand and launch a digital bank in the Philippines. JG Summit and Apis Partners will take minority stakes in the South African banking start-up.

AUTOMOTIVE

Mitsubishi Motors set to reverse move to withdraw from Europe

Mitsubishi is to formally consider its decision to withdraw from Europe at a board meeting on Thursday, following pressure from alliance partners Renault and Nissan.

AVIATION

EasyJet founder reduces stake

The founder of easyJet, Sir Stelios Haji-Ioannou, has reduced his holding in the low-cost airline from a little under 28.7% to a little over 27.7%, raising around £32m.

FINANCIAL SERVICES

Boost for fintech post-Brexit

The Times previews a report due out on Friday by Ron Kalifa of Worldpay fame which details how Britain can build on its fintech success. Among the ideas in the study will be a £1bn fund financed by insurers, pension funds and other private investors to back start-ups. There will also be a call for visas for overseas talent and plans for regional hubs.

Aviva French business sold to Aema Groupe

Aviva’s French operation is to be sold for over €3bn to Aema Groupe. New CEO Amanda Blanc remarked: “The sale of Aviva France is a very significant milestone in the delivery of our strategy... It is an excellent outcome for shareholders, customers, employees and distributors.” The move comes after the insurer sold its Singapore arm for £1.6bn and its Italian subsidiary for €400m towards the end of last year. It is expected to offload its Polish unit in the coming months.

Standard Life name bought by insurance group

Insurance group Phoenix has acquired the Standard Life name from Standard Life Aberdeen, with Stephen Bird, chief executive at Standard Life Aberdeen commenting: “What we are announcing today is an agreement that simplifies the relationships between Standard Life Aberdeen and our strategic partner Phoenix Group in a way that will allow us to work together constructively as partners for at least the next 10 years.”

LEISURE & HOSPITALITY

IHG loss amid repeated lockdowns

Intercontinental Hotels Group has reported a $280m pre-tax loss, with revenues down 48% to $2.4bn in the year to end December. The firm’s finance head Paul Edgecliffe-Johnson remarked: "This was obviously the toughest year we've ever had. But even in that year we were cash flow positive. The business is very resilient and robust, and as demand for travel comes back, then we will see that recover very rapidly.”

Travel firms report surge in bookings after government announcement

Following an update from the Prime Minister on the lifting of Covid restrictions, airlines and travel firms saw a surge in bookings on Monday evening sending shares up. EasyJet was up 4.5% yesterday, TUI rose by 3.5% and IAG rose by almost 2%. Cineworld gained 9.5% on hopes that cinemas will reopen in mid-May.

Cruise firm announces stock sale plans

Carnival has announced that it plans to sell $1bn (£700m) worth of stock through a public offering, with the proceeds of the sale to be used for “general corporate purposes.” This comes after the company extended cruise cancellations from the US, Europe and Australia to the end of April or later.

MANUFACTURING

UK urges food manufacturers and farmers to target Asian middle class

The international trade secretary Liz Truss is urging food manufacturers and farmers to target the Asian middle classes as the Government encourages a diversification of trade to reduce reliance on the continental market.

MEDIA & ENTERTAINMENT

Chip shortage threatens Christmas supplies of PlayStation 5

Supplies of Sony’s PlayStation 5 could be constrained due to the ongoing global shortage of semiconductors, the FT reports, although the company expects supply limitations to ease over the course of the year.

PROFESSIONAL SERVICES

G4S shareholders urged to back Allied Universal offer

G4S shareholders have been advised by the firm to vote in favour of Allied Universal’s £3.8bn bid. G4S management had already agreed to accept, while shareholders have been hoping for an improved offer as they held off approving extensions from two suitors.

REAL ESTATE

Stamp duty holiday to be extended to end of June

The Chancellor will use his March Budget to extend the stamp duty holiday until the end of June, according to the Times. In July last year the Chancellor raised the threshold for paying stamp duty from £125,000 to £500,000, providing people with up to £15,000 in savings. Experts warned ending the policy on March 31st would slow sales and send prices down by over 8%. However, Paul Johnson, the head of the Institute for Fiscal Studies, warned that by extending the stamp duty holiday the Government was increasing the likelihood of it becoming permanent. Extending the holiday is expected to cost the Treasury about £1bn. Additionally, the business rates holiday for the retail, hospitality and leisure sectors will also be extended at a cost of just under £1bn a month, along with the VAT cut for hospitality and tourism at an estimated cost of £200m a month.

London skyscraper stake to be sold

Saudi prince Abdul Aziz bin Fahd is reportedly selling his stake in City skyscraper Salesforce Tower to an American investor for approximately £195m, after the property attracted interest from other entities such as New York-based investment firm Madison International Realty.

ECONOMY

CBI survey shows fall in retail, wholesale and motor trades employment

The CBI’s distributive trades survey has revealed that employment levels in the retail, wholesale and motor trades declined at a record pace in the year to February. CBI principal economist Ben Jones commented: “With lockdown measures still in place, trading conditions remain extremely difficult for retailers. Record growth in internet shopping suggests that retailers’ investments in on-line platforms and click-and-collect services maybe paying off, but the re-opening of the sector can’t come soon enough to protect jobs and breathe life back into the sector.”

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