Amigo Loans rescue plan turned down by High Court
Guarantor lender Amigo's plan to cap compensation payouts has been turned down by the High Court, which agreed with the Financial Conduct Authority that the proposal was unfair to the firm's creditors. Mr Justice Miles said borrowers had not been given the necessary information to understand “the basis on which they were being asked by Amigo to sacrifice the great bulk of their redress claims, while the Amigo shareholders were to be allowed to retain their stake”. Gary Jennison, chief executive, said: “We are currently reviewing all our options and will provide an update at the earliest opportunity.” Analysts expressed their surprise at the decision and pointed to the higher probability that a similar scheme proposed by Provident would be rejected too.
New Banking Resolution Service up and running
The British Banking Resolution Service is now processing 75 new cases a month, the Times reports. The new small business lending redress service, which launched in February, works in tandem with the Financial Ombudsman Service and can secure compensation of up to £355,000.
Pandemic sees increase in private equity dealmaking
City AM analyses the wave of private equity takeovers of UK firms since the advent of the coronavirus pandemic, with 123 companies including Asda, AA and Bourne Group taken private in the last 12 months. It notes that "A growing trend over the past year has been the rise of this so-called ‘club deal', when two or more private equity or trade buyers jointly acquire a company."
US bank CEOs to speak before Senate
The Senate Banking and House of Representatives Financial Services committees in the US are to hear from the chief executives of JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, Wells Fargo & Co, Goldman Sachs Group and Morgan Stanley on a range of subjects such as economic inequality, fair lending, diversity, racial justice, climate change, cryptocurrencies and tax policies. Kevin Fromer, CEO of the Financial Services Forum, remarked: "The nation's largest banks have shown that in the face of a real-life stress test, they could provide essential support to small businesses, households, and large employers, while at the same time remaining safe and strong."
South African digital currency plan announced
The South African Reserve Bank (SARB) is considering a digital currency programme for general retail purposes. It announced a plan to "investigate the feasibility, desirability and appropriateness of a central bank digital currency (CBDC) as electronic legal tender, for general-purpose retail use, complementary to cash," to be concluded in 2022. Elsewhere, the Indonesian central bank is assessing which platform it will use for a planned new digital rupiah currency.
Deutsche accelerates overhaul of corporate bank after Brexit
Deutsche Bank is relocating 100 bankers from London to offices in the EU and Asia as it accelerates a restructuring of its corporate bank following Brexit. The Telegraph notes that over £900bn in bank assets - about 10% of the entire UK banking system - has moved or is being moved out of the UK as a result of Brexit.
US interest-rate cap bill proposed
US legislation that would establish a national cap on how much lenders can charge in interest is being prioritised by Democratic head of the Senate Banking Committee, Sherrod Brown. This comes after his recent repeal of a rule that consumer advocates claimed had allowed payday and other high-interest lenders to get around interest rate caps.
Dual tranche bond of $1.5bn issued by Intesa Sanpaolo
Italian lender Intesa Sanpaolo has issued a dual tranche TIER2 dollar-denominated bond for $1.5bn, with Barclays, Credit Suisse, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley and Nomura acting as bookrunners for the issue.
Aston Martin investors rebel over executive pay and diversity
Aston Martin’s decision to pay executive bonuses last year and the company’s lack of female board members led to an investor rebellion at the luxury carmaker’s AGM yesterday, with 18% opposing its pay report and 17% the re-election of executive chairman Lawrence Stroll. Despite the protest votes shares rose 68.5p to £19.90.
Construction giants urged to work with small firms
Large construction companies have been urged to work with SMEs that are not able to engage in bulk buying and so are short of essential materials. The Construction Leadership Council (CLC) said bulk buying not only impacts the ability of small firms to complete projects, but also the cash flow of their business. The CLC called on businesses to “work collaboratively to manage this unprecedented situation to everyone's benefit”. Soaring demand for raw materials is set to drive prices up 7% this year, the ONS has warned.
Sunak to propose powers to block London listings on security grounds
Companies could be blocked from listing on the London Stock Exchange on national security grounds following a consultation launched by the Chancellor Rishi Sunak amid concerns about “dirty money” in British financial markets. The UK Listing Authority, part of the Financial Conduct Authority, currently decides on a company's eligibility to list in London but ministers could be given fresh powers to take a more active role in interventions. A spokesperson for the Treasury said: “The UK’s reputation for clean, transparent markets makes it an attractive global financial centre. We’re planning to bolster this by taking a targeted new power to block listings that pose a national security risk, and will launch a consultation to inform its design in the coming months.”
Goldman Sachs wins approval for wealth management deal with China’s ICBC
Goldman Sachs Asset Management will launch a wealth management joint venture with Industrial and Commercial Bank of China (ICBC) - China's largest bank - after winning initial approval for the plans. The joint venture "will combine Goldman Sachs Asset Management's expertise in investment and risk management with ICBC's strong brand recognition and unparalleled access to retail and institutional clients across China," a statement from GS read.
BoE to step up drive to encourage new insurers
The Bank of England believes Brexit has given Britain a "unique" opportunity to refashion its insurance sector to attract more new entrants without undermining high regulatory standards. In a speech to the Association of British Insurers, Anna Sweeney, the BoE's executive director for insurance supervision, said: "We can and should play a part in trying to reduce any unnecessary barriers that are there," adding that the Bank will consider ways to make authorisation of new insurers more efficient.
AstraZeneca deal with Alexion investigated by UK regulator
AstraZeneca’s $39bn takeover of US biotech firm Alexion is being investigated by the Competition and Markets Authority amid antitrust concerns. AstraZeneca stated: “The commencement of the UK CMA’s formal review is another important step towards closing of the proposed acquisition.”
MEDIA & ENTERTAINMENT
Nick Clegg shows Big Tech fears Dacre at helm of Ofcom
Facebook’s PR chief Nick Clegg is lobbying against the appointment of Fleet Street veteran Paul Dacre as chairman of Ofcom. The former Liberal Democrat leader has joined forces with Google to persuade ministers against giving Dacre the job. Mr Dacre, who is now one of four candidates expected to be interviewed in the coming weeks, is a critic of Big Tech’s monopolistic power and has called for them to be broken up. Ofcom’s remit will be expanded to include the internet and it will have the power to block companies like Facebook and Twitter from operating in the UK, or hit them with a fine worth up to a tenth of their turnover.
House sales expected to surge
House sales are expected to surge in the months ahead, despite a lack of supply driving prices upwards. Property transactions are predicted to exceed 1.5m this year, according to Zoopla, with sales expected to be up 45% on last year. This would be the most sales in a calendar year since 2007 when 1.6m sales were recorded. The average number of annual transactions has been between one and 1.2m over the last decade. House price growth has almost doubled, according to Zoopla, hitting 4.1% in April and up from 2.3% in the same month in 2020.
Washington DC sues Amazon alleging anticompetitive business practices
The Attorney General for the District of Columbia has filed a lawsuit alleging Amazon's control of up to 70% of US online sales results in higher prices for consumers. Washington DC accuses Amazon of charging third-party sellers on its site fees of up to 40% of a product's price, as well as stopping them from charging less on other platforms. It says: "Far from enabling consumers to obtain the best products at the lowest prices, Amazon instead causes prices across the entire online retail sales market to be artificially inflated, both for products sold on Amazon's online retail sales platform and on its competitors' online retail sales platforms."
Made.com plans London float
Made.com has announced plans to raise £100m in an initial public offering as it seeks to quadruple annual sales to £1.2bn within the next four years. In the longer term, the firm is aiming for a “low teens” profit margin before interest, tax and depreciation charges.
Government borrowing fell in April
Office for National Statistics (ONS) data show borrowing fell in April compared with the same month last year, as parts of the economy reopened after lockdown measures eased, driving tax receipts up 7%. Official figures show borrowing was £31.7bn - significantly lower than the deficit of £47.3bn in April 2020 and £7bn less than expected. The ONS now estimates that the Government borrowed a total of £300.3bn in the financial year to March. Although down slightly from its previous estimate of £303.1bn, it remains the highest level since the end of World War Two. Ruth Gregory, senior UK economist at Capital Economics, commented: "April's public finances figures showed that the Government's financial position isn't as bad as the OBR predicted only two months ago, reinforcing our view that the tax hikes and spending cuts that most fear may be avoided.” Julian Jessop, an economist at the Institute of Economic Affairs, agreed, stating that planned hikes in corporation taxes should now be abandoned. Alternatively, some of the time-limited Covid tax cuts should be made permanent, “including the additional tax breaks for business investment.”
UK good investment target, Gilbert says, but global markets concerning
Speaking at a panel organised by the Centre for the Study of Financial Innovation, City veteran Martin Gilbert said the UK remained a good bet for investment as UK equities remained undervalued compared to global competitors and the rebound from the pandemic “is going to be pretty good.” However, Gilbert warned that global stock markets “are as high as I’ve ever seen,” reminding him of 1999 when the dot.com bubble burst. He predicts that when the bear market arrives active rather than passive investing would come to the fore “because theoretically growth stocks should not do as well as value stocks during that period.”
‘Greenwashing’ concerns highlighted
More than half of financial services professionals believe ‘greenwashing’ is rife within the industry, according to a study by data agency iResearch Services. The research, which polled 550 decision-makers at financial institutions, also found that 38% believe every business is operating “unethically” by claiming to be environmentally sustainable. Nearly half of financial services professionals, 45%, felt being truly sustainable was too costly.