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Daily News Roundup: Wednesday, 25th November 2020

Posted: 25th November 2020

BANKING

Fintech firms call for regulators to end lenders’ data dominance

UK financial regulators are being urged by advocacy group the Coalition for a Digital Economy (Coadec) to end the dominance of traditional banking institutions over the use of consumer data. The consortium, including firms such as TransferWise and Seedrs, is calling for the watchdog to “break banks,” with Joel Gladwin, head of policy at Coadec, commenting: “By granting consumers a new data sharing right, and encouraging a market of specialists to compete, banks will have very little room for manoeuvre this time. Ultimately, this will allow consumers to access better, and more tailored, financial services than they do currently.”

Risk of catching Covid from cash is low

Bank of England researchers have found that the risk of catching coronavirus from handling banknotes is low. "The survival of virus on banknotes is no greater - indeed appears potentially less - than on reference surfaces representative of the many surfaces that people may come into contact with in their routine life," the report said. "In summary, any risk from handling cash should be low."

Britain can take the lead in fintech after Brexit

Ian Liddell-Grainger MP, chair of the All-Party Parliamentary Group (APPG) on Open Banking and Payments, says that by “moving quickly to embrace an open finance environment, and correcting the deficiencies within existing European regulation,” the UK can cement its position as a fintech leader after Brexit.

PRIVATE EQUITY

AA agrees sale to private equity groups

The AA has agreed a 35p-per-share deal with Warburg Pincus and TowerBrook Capital Partners. The debt-laden roadside recovery group is to return to private equity ownership after just six years in the public markets.

INTERNATIONAL

Credit Suisse to take $450m hit on hedge fund business

Following an announcement by York Capital Management that its European hedge fund unit would be wound down, Credit Suisse has confirmed it will take a $450m hit as a result. The FT’s Lex says the setback won’t derail the bank but closing the valuation gap with rival UBS looks tough.

AUTOMOTIVE

No-deal Brexit could cost carmakers £55bn in tariffs

The Society of Motor Manufacturers and Traders has warned the Government that a no-deal Brexit would cost the sector up to £55bn by 2025. Trading under WTO rules would keep annual vehicle production "below one million units consistently", the society said.

AVIATION

Airlines offer passengers health passes to steer out of Covid crisis

United Airlines, Lufthansa, Virgin Atlantic, Swiss International Air Lines and JetBlue will begin rolling out a digital health pass to certify travellers are Covid-free before flying from December.

FINANCIAL SERVICES

City of London makes late scramble to limit Brexit disruption

Goldman Sachs is among City firms and regulators making last-minute arrangements to avoid disruption when the UK leaves the EU’s single market next month. A European stock-trading destination will be created by the US investment bank as it works to ensure that transactions in EU equities can continue after the expiration of the Brexit transition period, with Elizabeth Martin, global head of futures and equities electronic trading at Goldman Sachs stating: “It’s critically important for us to have the capabilities in place for all our clients.” She noted that the firm believes there “will be a changing of the liquidity landscape in Europe and the UK post-Brexit.”

Wealthy take top financial services jobs

Findings released by a new independent taskforce looking to improve socio-economic diversity in financial services show nearly nine in ten senior roles are held by the wealthiest third of households while employees from less privileged backgrounds take 25% longer to progress in their careers. This "progression gap" increased to 32% for black people of lower-income households. John Glen, the City minister, said: "We're entering a new chapter for UK financial services and it's vital firms have the right leadership to grasp the opportunities ahead. That means taking action to ensure talented people from all backgrounds and parts of the country can reach their full potential."

Wirecard scandal sees regulatory requirements tightened in Germany

Germany’s DAX blue-chip stock market index is to introduce new rules including a requirement that firms joining must be profitable for the previous two years. The move, announced by Deutsche Börse, comes in the wake of the Wirecard collapse earlier this year, and will see membership of the mid-cap MDAX index reduced from 60 companies to 50, while members of the updated indices will be selected in September next year and updated twice annually.

LEISURE & HOSPITALITY

Compass results released

Profits before tax at catering firm Compass Group were down 75.9% to £427m for the year to 30 September, from £1.77bn in the year earlier period, with revenues down 18.8% to £20.2bn. Amisha Chohan, investment director at Quilter Cheviot, said of the firm: “Operating in a fragmented market, with over 10% market share, it is well-positioned, especially post-COVID-19, to capitalise from an increasing trend of outsourcing catering services as it is cheaper and safer.”

MEDIA & ENTERTAINMENT

IQE chief executive to step down from role

Dr Drew Nelson, chief executive of Apple supplier IQE, is to step down from the position after more than three decades. Phil Smith, chairman of the firm, commented: "The transition is a logical step. Drew has been with the company a long time and he founded it - it is an opportunity for new leadership and for someone to take it to the next stage and get someone in to look at scaling the business to a greater degree." This comes as the firm announced expected revenue for the year would be up by a minimum of 20% on 2019 levels to exceed £170m.

REAL ESTATE

Property boom as buyers trade up

With the stamp duty holiday boosting the property market earlier this year, residential transactions were up 8.1% to 105,630 in October compared to the year earlier period. "Residential transactions have increased incrementally each month [since May], reflecting the gradual easing of coronavirus public health restrictions for the property market and the introduction of residential transaction tax holidays within the various UK administrations," HMRC said. Growth has been driven at the higher end of the market by householders looking to trade up for bigger homes, but analysts said some of this demand was starting to fade due a reduction in stock on the market.

Countrywide executive chairman resigns post

Peter Long, executive chairman of estate agent chain Countrywide, has stepped down following the rejection by shareholders of a £90m cash injection by private equity firm Alchemy. Philip Bowdock, formerly of William Hill, is to take up the role of interim chief executive.

RETAIL

CBI retail survey for October published

The CBI’s monthly retail survey reveals that overall UK retail sales for last month were down as the numbers of people shopping online increased. The sales gauge was recorded at minus 25, compared to minus 23 in September. Ben Jones, CBI principal economist, remarked: “This month’s survey gives hope that the economic impact of the autumn lockdowns should not be as severe as in the spring. Both consumers and firms are adapting as best they can, borne out in this month’s strong online sales.”

ECONOMY

Chancellor to unveil spending plans for the coming year

Rishi Sunak will unveil the Government's spending plans for the coming year today with his Spending Review expected to include details on public sector pay, NHS funding, the state of the economy and a new jobs programme. The Chancellor will announce that the foreign aid budget will be cut by £4bn a year to £10bn as part of moves to shore up Britain’s finances as the country recovers from the pandemic. Ministers will introduce legislation to allow spending to be kept at a reduced level for several years. There have also been reports that the Chancellor is considering a pay freeze for all public sector workers except frontline NHS staff. The economy is projected to be 10% smaller than it was pre-virus with tax revenues dramatically down and public borrowing forecast to rise to £372bn, compared to the £55bn the Government had originally expected to borrow.

OTHER

Accountants and bankers swear the most at work

A survey of 1,400 employees at 100 UK companies commissioned by Savoy Stewart found that bankers, accountants and lawyers are the most foul-mouthed during internal meetings across British workplaces. Accountants and bankers lead the league table in a survey of 14 business sectors. Lawyers were in second position, followed by workers in travel and hospitality and sales.

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