UK alliance to tackle fraud epidemic
Stop Scams UK, an alliance of banks, tech companies, and telecoms groups, is set to pilot a new scheme to collect information on scammers. The group will collect information on scammers using phone numbers and email addresses provided by its members. The pilot will launch in the next month when Stop Scams’ members will begin to operate around 300 phone numbers and 100 email addresses to interact with scammers and then follow the trail back to collect information on how fraudsters operate. According to figures from trade body UK Finance, over £1.2bn was stolen by scammers in 2022. The Government launched its fraud strategy last month, which included plans to clamp down on spoof numbers as well as the creation of a National Fraud Squad. However, some criticized the scheme for watering down proposals which would have made big tech companies reimburse victims of fraud, arguing that the majority of fraud starts online. Oliver Prill, CEO of fintech firm Tide, called for an anti-fraud tax which would be levied across the value chain, including on social media companies.
Santander boss warns against more regulation
Ana Botin, Chairman of Santander and head of trade body IIF, has warned against more regulation in the financial industry. Asked about the market turmoil in the US and Switzerland, where Silicon Valley Bank collapsed and Credit Suisse was taken over by UBS in a state-assisted rescue, Botin told an audience in Brussels that "what happened is mismanagement." She explained: "Everything that you shouldn't do was done: concentration of risk, mismatch of maturities, liquidity not enough of it, investing on government debt at 1% or less than 1%".
Barclays hires new global head of equities
Barclays has appointed Scott McDavid, a former Morgan Stanley veteran, as its new global head of equities. The bank has also appointed Ronnie Wexler as global head of equities distribution. McDavid will join Barclays in September and report to Adeel Khan, co-head of Global Markets. Wexler joins in June and will report to Stephen Dainton, the lender's other Global Markets chief.
Qatari sovereign wealth fund backs London AI firm
London-based artificial intelligence firm Builder.ai, which uses AI to allow businesses and people to build software, has landed a $250m cash injection led by the Qatari Investment Authority. Existing investors including Iconiq Capital, Jungle Ventures and Insight Partners also took part in the funding round.
Private equity firm GTCR raises $11.5bn for new fund
Private equity firm GTCR has raised $11.5bn from investors for its largest fund ever, GTCR Fund XIV. The fund will acquire companies across the technology, healthcare, financial services, and consumer sectors.
SoftBank’s long-term debt rating cut deeper into junk status
S&P Global has cut SoftBank’s long-term credit from double B plus to double B after the Japanese group’s tech-heavy Vision Funds this month posted record annual investment losses of $39bn.
Euro zone shadow banks vulnerable to market volatility
Non-bank financial firms, also known as shadow banks, are at risk of market volatility, according to European Central Bank Vice President Luis de Guindos. Despite performing well during the banking turbulence of March, de Guindos warned that the non-bank financial sector remains particularly exposed to asset price corrections and credit risk, should corporate sector fundamentals deteriorate substantially. He also noted that non-banks' exposure to property markets has increased markedly in recent years, rendering institutions vulnerable to ongoing price corrections in real estate markets.
PacWest shares climb 13%
PacWest Bancorp's shares rose 13% in premarket trading on Tuesday after the bank announced plans to sell $2.6bn worth of its loan portfolio to build capital. The bank had previously said it was exploring strategic asset sales to sharpen focus on its core business segments.
Exodus of US investment advisers sparked by mergers and bank turmoil
US investment advisers are leaving banks for boutique firms or starting their own, with over 26,000 switching firms in 2022, according to Cerulli Associates.
Regulator vows to crack down on pension schemes with low returns
The Pensions Regulator (TPR) has promised to tackle poorly performing pension funds with the head of the regulator Nausicaa Delfas saying savers should not be missing out on investment returns. Ms Delfas said: “No saver should be in a poorly performing scheme that doesn’t offer value for money. Where we find poor performance, the message is clear: wind up and put your members into a better run scheme. Or we will consider all powers at our disposal.” Analysis for the Telegraph reveals that average savers are missing out on tens of thousands of pounds in lost investment returns at conservative British pension funds. Ms Delfas said that TPR will order trustees to meet high governance and administration standards and put value for pension customers at the top of their priority list.
Swiss Re leaves climate alliance
Swiss Re has become the latest major company to leave the Net-Zero Insurance Alliance (NZIA), a global climate alliance focused on reducing emissions. The move follows the exit of Munich Re, Zurich Insurance and Hannover Re. The NZIA is part of the Glasgow Financial Alliance for Net Zero set up by UN climate envoy Mark Carney. Swiss Re did not give a reason for its decision.
LEISURE & HOSPITALITY
Gaucho owner posts record-breaking results
Rare Restaurants, the parent company of Gaucho, has reported "record-breaking" earnings for the year. Despite facing inflationary pressures and disruptions caused by strike action, the company achieved a turnover of £73.5m, a 38% increase from the previous year. The opening of new locations in Glasgow and London contributed to this growth. Looking ahead, Rare Restaurants plans to open new Gaucho restaurants in Newcastle and Covent Garden, marking the first London opening in over a decade.
Food manufacturers reject government claims on price rises
Food manufacturers have rejected claims by the Government that they are responsible for stoking inflation by imposing unjustifiable price rises on consumers. Chancellor Jeremy Hunt has warned leading figures from the industry of "widespread concern" about the level of food price inflation, which new figures show is exceeding 17%. Hunt urged manufacturers to "ease the pressure on consumers" and said the Government was "ready" to impose new pricing rules after an investigation by the Competition and Market Authority. However, industry sources insisted that producers had absorbed up to 80% of additional costs from higher energy, transport and labour bills. They told Mr Hunt that if he wanted to reduce prices, the Government needed to ease regulations in areas such as recycling that were adding costs.
Over 1,000 homes repossessed in Q1
UK Finance reports a 50% increase in home repossessions in Q1 2023, with over 1,000 homes taken into repossession due to homeowners struggling to keep up with mortgage repayments. In addition to the 750 mortgaged properties repossessed, 410 buy-to-let properties were also repossessed. The Bank of England's 12 consecutive interest rate hikes in the past 18 months have led to mortgage rates increasing, but economists suggest that the majority of the extra cost to homeowners is still to be passed on. 76,630 homeowners are in arrears of more than 2.5% between January and March, indicating the impact of higher interest rates and the rising cost of living on households. A repossession is a last resort after mortgage payments are missed.
BoE has ‘lessons to learn’ after forecast errors
Bank of England Governor Andrew Bailey admitted to MPs on the House of Commons Treasury select committee on Tuesday that the Bank had failed to forecast inflation accurately and it had reduced the role of its own model when setting interest rates. Harriet Baldwin, the chair of the Treasury committee, likened the Bank’s failure to spot inflationary pressures to City figures missing warnings before the 2008 financial crisis. “I think you could’ve made the same error as bankers and traders did running into the financial crash,” she said. Mr Bailey went on to say that annual inflation was on track to fall sharply in the face of a recent drop in wholesale energy prices and despite the UK being hit with the fastest annual growth in food prices since the 1970s. High supermarket prices are being driven by food producers rebuilding their margins following a severe squeeze last year, Bailey said, rather than profiteering.
Growth in services adds to inflationary pressures
The latest survey of purchasing managers by S&P Global and the Chartered Institute of Procurement and Supply shows the service sector enjoyed growth in May, albeit slowing slightly from April's one-year high, while production levels at manufacturing firms fell at the fastest pace in four months. The index’s figure for May dropped to 53.9, from a 12-month high of 54.9 in April. Any reading over 50 shows growth. Chris Williamson, chief business economist at S&P Global, said the PMI was consistent with quarterly gross domestic product growth of 0.4% in the second quarter, speeding up from 0.1% in the first three months of the year. "However, this growth spurt is driving renewed inflationary pressures, as service providers struggle to meet demand and hence not only offer higher wages to attract staff but also find themselves able to charge more for their services," he said.
IMF expects UK to avoid recession this year
The International Monetary Fund has upgraded its outlook for the UK, saying the country will no longer fall into recession this year. The body previously predicted Britain would be the worst performing economy in the G7, but now says the UK will grow by 0.4% this year, up from its estimate in April of a 0.3% contraction. However, the organisation warned the Government against cutting taxes as this would fuel inflation and result in a longer period of high interest rates. Responding to the report, Chancellor Jeremy Hunt said the forecast was a “big upgrade” for the UK’s growth prospects, adding: “Today’s IMF report credits our action to restore stability and tame inflation.” Several commentators say Hunt is likely to use the IMF’s analysis to quell demands for tax cuts within Conservative ranks.
UK public borrowing rises on social security and interest payments
The UK Government borrowed an additional £25.6bn in April, the second highest monthly total since records began in 1993, according to the Office for National Statistics. The borrowing total was £3.1bn higher than forecast by the Office for Budget Responsibility at March's budget and was £11.9bn more than a year earlier. Rising social security benefits and debt interest pushed up spending as did the cost of energy support schemes. Compared with April 2022, income tax and corporate tax revenues were strong with increases of 7.8% and 7.7% respectively. But VAT receipts came in at just 0.4% up on last year - far below the rate of inflation, which stood at 10.1% in March. This indicates that consumers are beginning to tighten their belts and spend more on food, which is not subject to VAT.