Covid-19 aid schemes hit by ‘eye-watering’ levels of fraud
Graeme Biggar, the director-general of the National Crime Agency’s national economic crime centre, has warned that emergency Covid support schemes are being subjected to an “eye-watering” level of fraud. He told MPs there will be “substantial” losses for the taxpayer related to criminals targeting multibillion-pound taxpayer support such as the wage furlough and the bounce back loan schemes. Mr Biggar admitted to the Treasury select committee that, in general, Britain is “not good enough” at tackling economic crime and that the country is “not nearly hostile enough” to fraudsters. Meanwhile, fraud has reached epidemic levels in the UK and should be seen as a national security issue, according to think-tank the Royal United Services Institute (RUSI). The scale of credit card, identity and cyber-fraud makes it the most prevalent crime, costing up to £190bn a year. UK intelligence agencies should play a greater role in responding, the RUSI argues in a report. Policing should be better resourced and work more closely with the private sector, the report says.
HSBC accused of abetting China's attack on democracy
HSBC bosses appeared in front of MPs yesterday to answer questions on why the lender was freezing the accounts of pro-democracy activists in Hong Kong. Lawmakers accused chief executive Noel Quinn and chief compliance officer Colin Bell of “effectively aiding and abetting one of the biggest crackdowns on democracy in the world.” But Mr Quinn responded by stating that he “cannot cherry-pick which law to follow or which legal instruction to follow from a police authority.” Following the hearing, Conservative MP Bob Seely, said: “HSBC is happy to virtue signal in the West, yet desperate to avoid ethical debate in Hong Kong. None of Mr Quinn's answers have given me any confidence that HSBC has adequately engaged with this issue.”
Staley: Working from home not sustainable
Jes Staley has warned that working from home cannot last forever in the financial services sector. The Barclays CEO told the World Economic Forum yesterday that he did not think the situation was sustainable, a position echoed by Mary Erdoes, JP Morgan Chase's asset and wealth management boss. In the corporate world, "if you ask anyone today, it feels like it is fraying, it's hard, it takes a lot of inner strength and sustainability every single day to continue to focus and to not have the energy you get from being around other people", she said.
Time for Monzo to start making some money
The Times’ Katherine Griffiths reports on Monzo’s struggles as the challenger bank is lumbered with a requirement to hold 50.8% of its assets in loss-absorbing debt by 2024. This is far higher than the lender’s peers, which are closer to 20%, but reflect the bank’s high number of current account customers and perceived risk. Griffiths says it “used to be fashionable for financial technology start-ups not to care about breaking even. Investors’ mood on that has changed and regulators’ patience may also be wearing thin.”
UBS reports 137% increase in profit
UBS has reported net income of $1.71bn in the fourth-quarter of last year, representing a 137% increase on the year earlier period. CEO Ralph Hamers remarked: “Our strong 2020 results clearly demonstrate the true strength of our franchise and the commitment of our employees. It was a challenging year for our clients, for our colleagues and for our communities alike, which makes these results even more gratifying.” Operating income was $8.1bn, CET1 capital ratio rose 13.8% and tangible equity was up by 12.9%.
UniCredit chooses Andrea Orcel as chief executive
Andrea Orcel has been lined up as UniCredit’s new chief executive with an announcement expected as soon as this week.
Hyundai sets sights on 60% increase in EV sales this year
Hyundai Motor has announced that it is in early stage talks with Apple about a self-driving EV project, as the firm aims to increase EV sales by 60%.
Rolls-Royce issues update as travel restrictions tighten
Rolls-Royce has expressed concern about the effect of tighter travel restrictions, issuing new guidance saying that it expects to continue burning through cash in the short term. The firm expects to see its fortunes rise in the second half of the year, as it continues with a cost-cutting programme involving job reductions. The firm stated that “With liquidity of approximately £9bn, we are confident that despite the more challenging near-term market conditions we are well-positioned for the future.” Meanwhile, Chinese aerospace company Comac has said it will deliver its first passenger jet by the end of the year.
Crest Nicholson plans to reinstate dividend as revenue falls
Crest Nicholson swung to a loss in 2020 as a result of the coronavirus pandemic, with the housebuilder aiming to reinstate its dividend later this year. The firm reported a loss after tax of £10.7m for the period. Revenue was down from £1.09bn to £677.9m, with an exceptional charge of £48.1m.
Warning over City of London’s status as financial centre from ex-EU commissioner
Lord Jonathan Hill, former UK financial services commissioner to the EU has cautioned that the EU is trying to undermine the City of London’s status as a leading global financial centre. City AM notes that “The UK’s financial services sector lost its pre-Brexit access to EU financial markets on 1 January, with firms now having to either set up bases in Europe or negotiate a patchwork of regulations from individual countries. Major UK-based banks have moved more than £1trn of assets and thousands of jobs to EU financial capitals to avoid disruption.” Hill told the FT: “The bits of business that have left London have fragmented across Europe – to Amsterdam, Brussels, Frankfurt, Paris, Dublin. That says our competition is American and Asia so let’s see what they are doing.”
UK to start talks with Switzerland on financial services deal
Rishi Sunak will today start formal talks with his Swiss counterpart in an attempt to broker a new post-Brexit financial services agreement for the UK. The Treasury said the talks would see the two sides try to deliver “a comprehensive mutual recognition agreement that would reduce costs and barriers for UK firms accessing the Swiss market” and vice versa. The talks are expected to cover a wide range of areas, including banking, insurance, asset management and capital markets. Mr Sunak said: “Our ambition is to deliver one of the most comprehensive agreements of its kind in financial services as part of our plan to seize new opportunities in the global economy now we have left the EU.”
Britain begins work on post-Brexit asset management sector
The UK has set out its options for increasing the global attractiveness of its £9.9trn asset management sector after Brexit put EU retail fund investors out of reach. In a public consultation paper, the Treasury said that ideas for change include exempting authorised funds from tax and creating an unauthorised tax-exempt fund structure for investment in alternative assets. Other potential improvements could be made to real estate investment trusts. John Glen, the City minister, said that reforms to the UK funds regime would spur fresh investment into environmentally friendly green technologies. He added that growing the number of funds located in the UK would level up the UK’s economy, by supporting jobs outside London.
Angel CoFund launches 'fast-track' fund amid rebrand
Angel CoFund has launched a new £30m fund for early-stage UK businesses amid a decline in angel activity, as it rebrands to ACF Investors. Managing partner Tim Mills remarked: “There’s more capital than perhaps there has ever been, but most of that’s weighted to the later stages… we’ve seen a big drop off in angel activity.” He went on: “We have developed the Delta Fund to match the maturity of the UK angel investment ecosystem. The Delta Fund will provide access to more capital with reduced process from us.”
BlackRock pushes companies to adopt 2050 net zero emissions goal
The world’s largest asset manager has raised the prospect of dumping companies that fail to commit to achieving net zero emissions by 2050. BlackRock’s chief executive Larry Fink said in a letter to clients: “There is no company whose business model won’t be profoundly affected by the transition to a net zero economy.”
Quilter sees rise in assets under management
FTSE 250 wealth management group Quilter has said that its assets under management and administration were £117.8bn at the end of December, a 7% rise compared with a year earlier.
UK business rescues threatened by fears over pension regulator’s new powers
Uncertainty among professional advisers over how the Pensions Regulator will exercise new powers to punish individuals who damage company pension schemes could scupper business rescue deals, experts have warned.
LEISURE & HOSPITALITY
Saga sees growth in interest in holidays
Travel and insurance firm Saga has reported increased interest in holidays as the coronavirus vaccine programme continues. The company announced that it had £51m in cash available at the end of last year, with net debt of £785m.
City Pub Group reports decrease in income for 2020
City Pub Group has reported that income for the year to December 27 was £25.7m, down from £60m in the year earlier period. The chain expects to see a rapid return to profitability as soon as lockdown restrictions are eased.
MEDIA & ENTERTAINMENT
Facebook news service launches in UK
Facebook is to begin introducing a dedicated news feed on its UK platform after signing deals with the Daily Mail, Financial Times, Telegraph, Sky News and Channel 4 News. This follows earlier agreements with the Guardian, Economist and Independent, among other titles. The majority of outlets involved in the scheme will not be paid up front, but will earn revenue from traffic referrals and advertising. Facebook plans to drive subscriptions to paywalled titles by making some stories available for 24 hours.
Microsoft shares surge to new high on work-from-home revenue boost
Microsoft saw a 17% surge in revenue in the final quarter of 2020 to $43.1bn, driven by a boom in PC sales, surging demand for video gaming, and increased usage of its cloud services.
Apple set to post $100bn-revenue quarter after strong Christmas
Apple expects to post $102.6bn in its fourth-quarter earnings, up from $91.8bn in the year earlier period, with net profit expected to increase by 6.3% to $23.6bn.
EQT to buy Exeter Property Group in $1.9bn deal
Philadelphia-headquartered real estate investor Exeter Property Group is to be acquired by Swedish private equity group EQT for $1.9bn.
JD Sports considers funding options including equity placing
JD Sports has confirmed that it is “exploring additional funding options with a view to increasing its flexibility to invest in future strategic opportunities and that this may involve a non-pre-emptive equity placing.”
Rugby clubs reject £60m from private equity firm
Super League clubs have rejected an offer of investment believed to be worth around £60m from private equity firm Novalpina Capital. The deal would have seen Novalpina take a third of Super League‘s broadcast income for as long as it held a stake.
ONS releases new unemployment data
The Office for National Statistics has reported that the number of people out of work in the UK is increasing, with those in the 25 to 34 age bracket at greatest risk of being made redundant. In the three months to November, those in that age group had a redundancy rate of 16.2 per 1,000, representing a fivefold increase on the year earlier period. ONS deputy chief executive Sam Beckett remarked: "Payroll numbers show the number of workers on payroll have fallen by over 828,000 since the pandemic began,” though employment remains at "relatively high levels" in comparison with other countries.