BANKING
UK banks push back over fraud worries in Covid loans
Banks have reacted with horror at claims from former Treasury minister Lord Agnew of “woeful” oversight of the coronavirus loans scheme, fearing their reputation could be unfairly tarnished over accusations that they handed out billions to fraudsters. Banks were encouraged to lend swiftly to small companies via a 100% state guarantee on their losses underwritten by the taxpayer. Lord Agnew said £1bn had already been paid out to banks under the guarantee but payments should be halted until there was clarity on what lenders were doing to tackle fraud. One senior UK bank executive told the FT: “I am beyond words. People were working every hour God sent to find solutions.” The banker added that if cool heads do not prevail, meetings with the Treasury and the FCA were fully minuted and will show the pressure banks were under to push the loans out the door.
Legislators target companies linked to atrocities
Lawmakers around the world have called on their governments to draw up a blacklist of entities suspected of perpetrating atrocities that companies should then be barred from investing in. Sixteen British MPs and peers are among thirty-five legislators from more than ten countries who have moved to sanction companies for investing in firms that profit from the persecution of Uighur Muslims in China, for example. The move comes after HSBC was criticied for holding shares for a company said to be involved with the detention of Uyghurs.
PRIVATE EQUITY
MoneyGram reviews private equity bids
MoneyGram International is reviewing bids from three private equity firms - Madison Dearborn Partners, Siris Capital Group and Advent International. MoneyGram expects to decide on whether it will sell itself in the coming days, sources say.
INTERNATIONAL
Credit Suisse warns of trading slowdown
Credit Suisse has warned its investment bank will report a loss for the fourth quarter as a result of mounting litigation costs and a slowdown in trading activity. The alert comes after the Swiss bank lost its chairman Antonio Horta-Osorio for breaking Covid rules. Andrew Coombs at Citigroup commented: “We expect this result will be far worse than peers and its calls into question the new strategy which is to allocate more capital to wealth management and grow this business.”
African payments system negotiates with more banks
A new African payments system that will bypass the US and Europe is negotiating with more central and commercial banks to join the platform. The Pan-African Payments and Settlement System (PAPSS) launched in the six-nation West African Monetary Zone earlier this month, with six central banks and 15 commercial banks.
BoA staff to receive $1bn in special compensation awards
Bank of America said on Tuesday that it will distribute special compensation awards worth a total of about $1bn to the majority of its staff. CEO Brian Moynihan said in a note to staff that the move reflected a 47% increase in the lender's share price last year.
JP Morgan buys stake in Greek fintech Viva Wallet
JP Morgan has bought a 49% stake in Athens-based payments fintech Viva Wallet with the American banking giant expected to inject around $1.15bn into the firm.
FINANCIAL SERVICES
FCA to clamp down on compensation dodgers
The Financial Conduct Authority is to clamp down on financial firms using schemes of arrangement or other restructuring plans to shield themselves from liabilities to consumers, particularly redress orders. The regulator said that firms seeking to cap their liabilities should provide “the best possible outcome for customers…Failure to do so could result in the FCA objecting to the firm’s proposals in court. The FCA will also use its regulatory powers, including enforcement actions for misconduct by firms or their senior managers, when appropriate.” Company directors seen to be repeatedly “phoenixing” could be banned under fitness and propriety tests. The move comes after firms including Amigo Holdings and Provident Financial attempted to walk away from some of their liabilities. The Times’ Alistair Osborne says the stance is welcome but wonders if this isn’t another case of the regulator slamming the stable door after the horse has bolted.
UK financial services M&A hits five year high
The volume of mergers and acquisitions in the UK’s financial services sector bounced back to hit a five year high last year, with data showing dealmakers completed 252 deals in 2021, up from 134 in 2020. Despite the surge in deal volume, however, the overall deal value fell from £31.2bn in 2020 to £25.8bn in 2021. Separately, a survey of senior decision-makers at international banks, insurers and asset managers found a majority (87%) planned to expand their operations in the UK or to establish a first operation here. Sentiment is at its highest since the vote to leave the EU in 2016.
Amigo CFO resigns
Amigo Loans announced on Tuesday that its chief financial officer, Mike Corcoran, will step down immediate effect. “Corcoran will continue to support the business through an appropriate handover period,” Amigo said in a statement. His resignation comes as the lender warns of certain collapse if a new scheme to pay back customers and restart lending is not approved.
LEISURE & HOSPITALITY
Omicron hits Marston's sales
Marston's has revealed that like-for-like sales for the 16-week period to 12 January were down 3.9%. The company said like-for-like sales had been rising and were up 1.3% in the eight weeks to 27 November, but they fell sharply in the following eight weeks to 12 January as Omicron spread - falling 8.8% compared with the same period two years ago. The company said falls reflected "the impact of the Omicron variant and consumer sentiment related to the new variant.. as a result of Government messaging including guidance to work from home and the call to limit social distancing", with pubs in London suffering worse than those elsewhere in England.
Holiday bookings bounce as UK Covid travel tests axed
Holiday bookings have recovered sharply since Covid travel tests were scrapped in England and Scotland. Jet2 said bookings had increased by 30% on last week. The company’s CEO Steve Heapy said the removal of testing was "game-changer" for the travel industry.
MANUFACTURING
Nvidia doubts Arm takeover will complete
Shares in US chipmaker Nvidia fell 4% on Tuesday after Bloomberg reported that the company had privately told partners it does not expect the $40bn (£30bn) takeover of Britain’s Arm to go ahead, as regulators are yet to approve the deal 16 months after it was announced. Watchdogs in China have only recently started to formally review the deal, while a US government legal challenge seeking to block the sale is not due to begin until August – a month before the two-year deadline on the deal expires. In the UK, the Competition and Markets Authority (CMA) is investigating the sale on national security grounds, while European officials are believed to be weighing up a set of objections to the sale. Nvidia would lose a $1.25bn deposit it has paid SoftBank if the deal is blocked or fails to pass before a September deadline.
MEDIA & ENTERTAINMENT
Bob Dylan sells master recording rights to Sony
Bob Dylan has sold his master recordings to Sony Music Group - his record label for 60 years - in a deal believed to be worth up to $200m. Dylan sold the rights to his lyrics and compositions to Universal Music Group in December 2020 for $300m.
ECONOMY
Lower public borrowing gives Sunak room to stall NICs rise
Fresh data from the Office for National Statistics show UK public borrowing was £12.9bn lower than official forecasts in the financial year to December, leading experts to argue that the Chancellor now has the fiscal room needed to cancel the hike in National Insurance Contributions planned for April. Public sector net borrowing was estimated to have been £147bn, nearly half of that in the same period the previous year. “This fiscal room for manoeuvre makes it inevitable that the Chancellor will set out a plan to deal with the cost of living crunch,” said James Smith, research director at the Resolution Foundation. However, due to a rise in the retail prices index, the Government paid £8.1bn in debt interest in December, 200% higher than the £2.7bn bill in the previous year. Net borrowing came in at £16.8bn for the month, broadly in line with Office for Budget Responsibility projections. Total public sector debt, excluding bailouts for banks, was £2.34trn at the end of December, roughly 96% of GDP.
IMF warns of ‘multiple challenges’ to global economic recovery
The IMF has predicted that the UK economy will grow more slowly than expected this year as it recovers from the Covid pandemic. The forecast for UK growth in 2022 was cut to 4.7% from 5% in the IMF's latest world economic outlook. However, this will be the fastest in the G7 industrialised nations. The IMF sharply downgraded its forecasts for the US and China, citing high energy prices and new Covid curbs among its reasons. Overall, the IMF now expects global growth to go from 5.9% in 2021 to 4.4% in 2022, half a percentage point lower for this year than in its last prediction in October 2021. "The global economy enters 2022 in a weaker position than previously expected," said the IMF report. The outlook would be even worse, the IMF added, if central banks have to take firmer action to quell inflation or geopolitical tensions in Ukraine intensify.