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Daily News Roundup: Wednesday, 24th June 2020

Posted: 24th June 2020


Glen promises progress with financial services diversity

City minister John Glen has pledged to speed up progress on diversity in financial services stating at the launch of third annual review of the Women in Finance charter that “real challenges that still remain” and that “we cannot afford to miss out on the best talent and leadership.” The Treasury's work on the initiative was disrupted by the coronavirus outbreak. In an accompanying statement, Mr Glen said: “I look forward to seeing more firms meet their targets this year, and will continue to hold senior leaders accountable for delivering a more diverse and stronger workforce.” The Treasury’s annual review of progress found that of the 187 firms signed up to the charter before September 2018, 14% have set a goal to have an equal number of men and women in senior roles. Meanwhile, nearly 60% of firms set a target of 33% or above for female representation. On average women make up 32% of senior management - just below the 33% target the Treasury set for its signatories.

Financial services minister predicts reduction in banks’ office space

UK financial services minister John Glen has said that some lenders will reduce office space in the City of London after the COVID-19 pandemic ends, telling an online event on women in finance that a number of CEOs had offered different opinions on the issue. He said: “Some of the banks will reduce their physical footprint in terms of their square footage in the City. Others are valuing the need to get back into a single place to spend more time because we have lost some of the softer elements of interaction through this period.” Separately, the FT takes a look at how a range of banks are preparing to bring staff back into the office.

Business support loans breach £40bn mark

The Treasury has disclosed that loans to businesses hit by the coronavirus lockdown have risen to more than £40bn. They include £28.1bn in smaller bounce-back loans and £10.5bn in larger loans through the coronavirus business interruption loan scheme.

RBS business account switching deadline extended

Royal Bank of Scotland business customers have been given a further six months to switch accounts to other lenders under the terms of RBS’ financial crisis state aid package. The bank noted that the Incentivised Switching Scheme had been used by fewer customers during the pandemic.

Zopa gains banking licence

Zopa has been granted a banking licence and duly announced it would be launching a new digital bank offering a fixed-term saving account followed by an innovative credit card later in the year. Zopa Bank will sit alongside the fintech’s existing peer-to-peer platform.


Bailey laments pensions error

Andrew Bailey has warned that the consolidation of pension schemes in super-funds by private equity firms could pose a "risk to financial stability" and told the welfare secretary Therese Coffey that the new regime fails to offer "adequate protection" for pensioners.

Jeff Ubben quits ValueAct for social investing

ValueAct Capital founder Jeff Ubben has left the $16bn hedge fund to launch a new environmental and social impact investment company called Inclusive Capital Partners.


Credit Suisse to take stake in Brazilian digital broker

Digital broker modalmais has agreed a deal with Credit Suisse under which the Swiss lender will take a stake of as much as 35% in the Brazilian firm. Philipp Wehle, Chief Executive of International Wealth Management at Credit Suisse, remarked: “This transaction further enhances our ability to serve our clients digitally while getting access to additional client segments in a fast growing environment.”

Australian banking scandal could see Commonwealth Bank fined

Commonwealth Bank in Australia is facing significant fines from the Australian Securities and Investments Commission relating to allegations that it was paid Aus$22m ($15m) to promote subsidiary Colonial First State Investments’ retirement fund to customers.

Bullish investors pull $105bn from US money market funds in four weeks

Investors and corporate treasurers have started shifting the cash they deposited in ultra-safe funds during the COVID-19 crisis to higher-yielding investments, such as corporate bonds.


SMMT fears massive job losses without support

The Society of Motor Manufacturers and Traders (SMMT) said it expects annual car and light commercial vehicle production volumes to be cut by a third this year as a result of the COVID-19 pandemic. A survey of members found that about 25,000 roles are under threat in car factories and among suppliers. The SMMT called for measures such as business rate holidays, VAT cuts, while the head of Ford, Graham Hoare said an incentive scheme that encouraged people to trade in their cars for new models at the cheaper end of the market would “make the biggest difference in our industry”.


MPs intervene over holiday refunds

A cross-party group of MPs have written to aviation minister Kelly Tolhurst calling for action to force airlines and holiday companies to pay refunds for trips cancelled because of the coronavirus pandemic. The letter, organised by the consumer group Which?, states: “Many of the UK’s biggest airlines and travel operators are openly breaking the law by refusing refunds or failing to offer one within the required period.”


FCA given greater powers to phase out Libor

The UK government has given the financial regulator greater powers to ensure that the London Interbank Offered Rate (Libor) is scrapped by 2021 after plans to retire the interest rate benchmark were delayed due to the coronavirus crisis. The Financial Conduct Authority (FCA) will be allowed to compel changes to benchmarks such as Libor to protect consumers and market integrity, Chancellor Rishi Sunak told the Commons yesterday. “It is in the interests of financial markets and their customers that the pool of contracts referencing Libor is shrunk to an irreducible core ahead of Libor’s expected cessation, leaving behind only those contracts that genuinely have no or inappropriate alternatives and no realistic ability to be renegotiated or amended,” Mr Sunak said. Stephen Pegge, managing director of commercial finance at UK Finance welcomed the action saying it would remove uncertainty “for both customers and lenders” and play “a key role in ensuring fair and consistent customer outcomes”.

UK’s post-Brexit financial rules add pressure on EU over market access

The Treasury has set out how it intends to regulate banks, asset managers, and derivative traders when the Brexit transition period ends, putting pressure on the EU to decide if it is sufficient to allow British groups continued access to its markets. Chancellor Rishi Sunak said the government plans to bring forward a review of EU capital rules for insurers, known as Solvency II and make existing retail customer disclosure rules known as PRIIPs function better. Mr Sunak added: “The government continues to believe that comprehensive mutual findings of equivalence between the UK and the EU are in the best interests of both parties, and we remain open and committed to continuing dialogue with the EU about their intentions in this respect.” The UK and the EU have committed to complete a review into equivalence by the end of the month.

Car insurance firms could see profits return before end of year

Car insurers could see a return to profitability this year as a result of fewer car accidents, though losses are likely to return by next year because of falling premiums. Insurers have also warned of a rise in the cost of repairs, with expensive technology such as parking sensors and keyless unlocking causing previously routine procedures to cost hundreds of pounds more than before.

Thousands of UK steelworkers told to seek possible pension compensation

The Financial Conduct Authority has written to 7,700 former and current British steelworkers warning that those who have transferred out of the British Steel Pension Scheme since 2017 may have received unsuitable advice. In a review of advice given to scheme members, the regulator found only 21% of cases saw acceptable advice given. The remaining 79% was either unsuitable, or unclear.

London lands $1.8bn listing of Chinese insurer via Shanghai link

London’s second largest stock listing of the year has been completed by China Pacific Insurance, after it issued $1.8bn in global depositary receipts, backed by shares listed in Shanghai.

Insurers join World Bank to help small businesses in poorer nations

A new scheme supported by six of the world’s biggest insurance firms will see the World Bank Group channel billions of dollars of lending through financial systems in developing nations.


Hospitality to reopen July 4th

Boris Johnson has announced that the two-metre social distancing rule will be replaced by new “one-metre plus” guidance allowing pubs and restaurants to reopen on July 4th. Hotels and hairdressers will also be permitted to restart their business, as will theatres, cinemas, libraries, museums, theme parks and zoos. However, nail bars, indoor gyms and swimming pools must remain closed for now. Kate Nicholls, the chief executive of UKHospitality, said “70% to 80%” of the sector will open on July 4th, but reopening sites remains challenging because operators have so little time to prepare.


Intu battles for survival in crunch talks with lenders

Shopping centre owner Intu Properties has put administrators on standby in case it cannot reach agreement with its creditors. Intu is seeking a standstill agreement on its debt and is in emergency talks with seven banks behind its £600m revolving credit facility.


IHS Markit survey reveals that UK economy likely to see return to growth

IHS Markit’s flash purchasing managers’ index (PMI) has shown that the UK’s economic output reached a measure of 47.6 in June. The firm’s chief business economist, Chris Williamson, remarked: “June’s PMI data add to signs that the economy looks likely return to growth in the third quarter, especially given the further planned easing of the lockdown from 4 July.” He went on: “June saw a record rise in the PMI for a second successive month, confirming that the economy is moving closer to stabilising after the worst of the immediate economic impact from the COVID-19 pandemic was felt back in April.”

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