BANKING
Britcoin could cost banks a fifth of deposits
The Bank of England has said commercial banks would have to alter their business models in the event of a UK central bank digital currency being rolled out. Jon Cunliffe, the deputy governor for financial stability at the Bank, told a House of Lord’s committee meeting on CBDCs that banks would lose out on 20% of retail and commercial bank deposits to Britcoin if it is introduced. Explaining the benefits of a CBDC, the Bank of England’s governor Andrew Bailey told the committee that CBDCs will facilitate instant settlement for payments and would allow merchants to avoid the heavy transaction fees levied by traditional payments providers. Bailey added that any digital currency system should be controlled by the Bank which must have regulatory powers over the firms that were on the platform.
This year’s model for loan losses proves tricky for banks
Lenders are struggling to work out the true financial health of borrowers as they review their loan loss models. One chief accounting officer says: “The real problem is trying to figure out what the new normal is.”
PRIVATE EQUITY
The return of the private equity mega-deal
The FT says KKR’s proposed €33bn buyout offer for Telecom Italia is one of several reminders that the era of the private equity mega-deal is back.
INTERNATIONAL
JP Morgan Chase becomes world's most systemically important bank
JP Morgan Chase has become the world's most systemically important bank, according to the latest annual ranking of top lenders by the Financial Stability Board (FSB). Being on the table of the FSB’s 30 most systemic banks means having to hold additional capital and undergo more intense supervision. The lenders are divided between four “buckets” in order of how systemic, international, interconnected and complex they are, with JP Morgan in a higher bucket than its nearest peers. Last year the bank, which also was recognised as the world’s key systemic lender in 2019, shared the highest bucket with HSBC and Citigroup, but it is now alone in the next bucket up, which had been empty.
Citigroup looking to create 100 crypto roles
Citigroup is seeking 100 hires as part of a new push into digital assets inside the lender's institutional business. “We are focused on assessing the needs of our clients in the digital-asset space,” Citigroup said in a statement. “Prior to offering any products and services, we are studying these markets, as well as the evolving regulatory landscape and associated risks in order to meet our own regulatory frameworks and supervisory expectations.”
US regulators to clarify banks' crypto role in 2022
A joint statement from the Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency said regulators intend to clarify in 2022 what role traditional banks can legally play in the cryptocurrency market. The agencies said the rapid growth of cryptocurrency presents "potential opportunities and risks" for traditional banks. They said regulators want to provide "coordinated and timely" clarity to the institutions they monitor.
Cowen buys M&A advisory firm
New York-based Cowen Inc said on Tuesday it would buy Portico Capital Advisors, an advisory firm focused on dealmaking in the software industry, as the financial services firm seeks to bolster its investment banking business.
Popularity of crypto funds sparks growing interest from managers
Fidelity, UBS and State Street Global Advisors have confirmed that they are looking into the potential of offering exposure to cryptocurrencies, such as bitcoin.
FINANCIAL SERVICES
AssetCo enters bidding war for River & Mercantile
AssetCo, the Aim-listed acquisition vehicle chaired by Martin Gilbert, and rival fund manager Premier Miton have both made bids for River and Mercantile. Shares in the asset manager rose 12% in morning trading after the bids were made known. A deal with either contender is dependent on R&M’s planned deal with Schroders, which was announced in October, being completed, according to reports.
Generali in talks for La Medicale
Generali is set to enter exclusive talks with Credit Agricole before the end of the year to buy the French bank's health insurance unit La Medicale, which specialises in insuring health professionals.
Binance in talks with sovereign wealth funds as it seeks investments
As the cryptocurrency exchange seeks fresh investment, CEO Changpeng Zhao explains to the FT how Binance is looking for regulators to be more clear about the crypto space.
Brexit is a slow bleed for the City of London
The FT’s Helen Thomas says the Government’s strategy for compensating for a gradual loss of business to the EU is to import the “frothier” elements of US capital markets and “pivoting to parts of the globe”.
LEISURE & HOSPITALITY
UK lottery operator reports record first half sales
Camelot, which operates the National Lottery, reported sales of £3.9bn in the six months to September 30, up 2.7% compared with the same period in 2020. Camelot is one of at least four bidders aiming to secure the next licence.
MEDIA & ENTERTAINMENT
ITV seeks to renew lucrative horse-racing rights
ITV is looking to renew its television rights for horse racing early in a move the broadcaster hopes will see it secure a lucrative revenue stream of advertising revenue from bookmakers. ITV has shown racing since 2017 when it won the contract from Channel 4 and Racecourse Media Group, which manages media rights on behalf of a group including the Jockey Club.
Investment banks net more than $320m from sale of WarnerMedia to Discovery
The sale of AT&T’s WarnerMedia to Discovery made over $320m for investment banks. Five years earlier, many of the same advisers made hefty fees from the sale of WarnerMedia - then called TimeWarner – to AT&T, the FT notes.
REAL ESTATE
House sales plunge after stamp duty relief ends
Figures from HMRC show the number of house sales in England fell 33.4% year-on-year to 66,830 last month, the lowest October level recorded since 2008. Across the whole of the UK there were 76,930 transactions - 28.2% lower than in October 2020 and a 52% drop since September, when buyers rushed to take advantage of the last of the stamp duty holiday savings. However, experts said the number of sales was still higher than in July, indicating low interest rates and a pent up desire to move home continue to sustain activity.
RETAIL
AO World shares dive amid driver shortage
Online electrical retailer AO World reported an operating loss of £11m in the six months to 30 September 2021, sending shares down 24% before recovering somewhat in later trade. A shortage of drivers and global supply chain issues stalled growth in the UK, the company said.
SPORT
Football governance poised for shake-up
A review into governance in football could see a new regulator recommended with Tracey Crouch, a Conservative MP and former Sports Minister, who is chairing a review panel, previously saying a new watchdog should have oversight of financial regulation in the game, corporate governance and ownership, but that it should not play a role in “football issues” like the running of leagues. Recommendations from the review will be published on Wednesday evening.
ECONOMY
UK business surveys point to Bank of England rate rise in December
The flash purchasing managers’ index published on Tuesday by IHS Markit and the Chartered Institute of Procurement and Supply showed that almost two-thirds of private sector companies reported rising costs in November. This indicates the steepest rate of input price inflation in more than 20 years, driven by higher wages and bills for fuel, energy and raw materials. But despite supply shortages and rising price pressures activity remained strong with output across the services and manufacturing sectors virtually unchanged from October’s reading of 57.8, signalling a healthy rate of expansion. “A combination of sustained buoyant business growth, further job market gains and record inflationary pressures gives a green light for interest rates to rise in December,” said Chris Williamson, chief business economist at IHS Markit, adding that the data pointed to “a welcome pick-up in GDP growth after the slowdown seen in the third quarter”.
Traders in £2bn bet against sterling
Since the Bank of England failed to deliver on a widely expected interest rate rise earlier this month, traders have bet £2bn that the pound will slump with shorts against sterling now at their highest level since June 2020. Francesco Pesole, currency strategist at ING, said: “Despite the tendency to show very wide swings, it seems to be signalling some worsening in market sentiment on the currency. There is a chance that part of the market is growing increasingly concerned about a resurgence in Brexit risk.”