Virgin Money sees personal lending and mortgage growth
Virgin Money has cut the amount of money put by for bad debts in the pandemic, releasing £19m of cash set aside for loans that could turn sour in its third quarter. The lender added that the remaining £678m of provisions could be cut further alongside full-year results if the rebound in the wider economy continues. Virgin Money posted a 0.7% rise in mortgage lending to £58.7bn for the three months to June 30, while personal lending grew 2.5% to £5.2bn. This helped offset a 2.4% drop in business lending, with Government-backed lending balances falling 3.2% to £1.4bn as borrowers started to repay emergency loans. Virgin Money also saw a rise in current account customers, with nearly 110,000 accounts opened this financial year so far - up from 80,000 during H1. Relationship deposits increased 3.7% to just under £30bn, though overall deposits decreased slightly by 0.8% to £68bn. Chief executive officer, David Duffy, said: “Virgin Money performed well as our strategy continued to translate into improved financial delivery in a strengthening environment". Although the lender continues to feel the effect of the pandemic in the short term, he added: “We are well placed to grow profitably next year as we play our role to support the UK economic recovery.”
HSBC accused of ‘blatant and indefensible’ forex fraud by ex-client
Lawyers for currency manager ECU Group have told a High Court trial that currency traders at HSBC made extra profits through activity which amounted to “blatant and indefensible” fraud.
TPG raises $5.4bn for climate fund
TPG has raised $5.4bn for its inaugural fund under its climate investing strategy from a number of high-profile investors including Allstate Corp and Hartford Financial. TPG said the fund is designed to expand the scope of commercially viable climate technologies.
BNP Paribas to buy Floa
French retailer Casino and Credit Mutuel Alliance Federale have agreed the sale of web and mobile payment solutions provider FLOA to BNP Paribas for €258m. The transaction is expected to be completed in the next few quarters, subject to necessary approvals, including from the French competition authority and the European Central Bank.
Santander Brasil CEO set to be chair
Brazilian bank Santander Brasil has said that CEO Sergio Rial will become board chairman, with corporate banking head Mario Roberto Opice Leao to become chief executive in moves that will take effect in January.
Loosening of City rules may see Spac deals surge
London could see a surge in blank cheque company flotations after the Financial Conduct Authority (FCA) relaxed proposed rules on special purpose acquisition companies, or Spacs – entities that raise cash from investors through flotations and later find operating businesses to buy. The City watchdog has lowered the size threshold for Spacs qualifying for a key new concession that they will not need to suspend their shares when announcing deals, with this cut from the £200m proposed in April to £100m. The FCA is also giving Spacs an extra six months to clinch a deal before needing to seek shareholder approval to extend their life. The FCA said it is seeking to strike a balance between keeping high standards and investor protection, while also trying to encourage more Spac listings in the UK. “We are not, however, aiming to engage in a regulatory ‘race to the bottom’ on standards,” it said. Delphine Currie, a partner at law firm Reed Smith, said, “Given the size of most UK Spacs, the FCA’s decision to lower the minimum fundraise required to benefit from the new regime from £200m to £100m is very welcome”. This, she added, “could be the moment that kick starts Spac listings in the UK.”
LEISURE & HOSPITALITY
Just Eat investor questions management
Cat Rock Capital, a major investor in Just Eat Takeaway, has urged the food delivery platform to explore a potential merger, saying management’s “deeply flawed” communication with investors has contributed to a 28% share price drop this year. The activist investor, which holds a 4.7% stake, said Just Eat is at risk of a hostile takeover bid well below market value and called for bosses to explore “strategic combinations with other global players”.
Food lobby fights UK plan to make brands pay for litter picking
The FT looks at efforts by food and drink manufacturers to push back against Government proposals that could see them expected to help meet the cost of litter-picking and business waste disposal.
Two-year mortgage rates could fall to 0.75%
Experts are predicting that two-year mortgage rates could fall to as low as 0.75% as competition heats up following the end of the stamp duty holiday. Aaron Strutt, product director at Trinity Financial, said: "More lenders will reduce their prices over the coming weeks.” He added that five-year rates could fall further too in what is becoming a “mortgage rate war.”
London sellers get 91% of asking price
Sales data shows that property sellers in London are now achieving 91% of their initial asking price, an increase of 6% on Q1. Demand for homes means some boroughs in the capital have seen average sale prices exceeding the listed price, with sellers in Barking and Dagenham securing 112% of the asking price, those in Barnet and Bexley achieving 101% and sellers in Brent and Bromley typically receiving what the home was marketed for.
Retail sales strong in July
Analysis by the Confederation of British Industry (CBI) shows that UK retailers saw strong sales growth in July, although the rate was down slightly on June, which had seen the fastest rise since 2018. The CBI data shows that retail sales volumes rose 23% in July, having jumped 25% in the previous month. The CBI survey of 124 firms shows that for July, companies reported the fastest growth in orders for more than a decade, amid 49% year-on-year growth. Ben Smith principal economist at the CBI, said the July figures show that “consumer demand continues to support the UK’s economic recovery”.
Morrisons' shareholder will not support Fortress takeover bid
Silchester International, Morrisons' biggest shareholder, says "it is not inclined to support" the £6.3bn takeover bid by a US firm Fortress Investment Group. The shareholder, which owns a 15.14% stake in Morrisons, said in a statement there was "little in the recommended offer that could not be achieved by the supermarket as a listed company". The public intervention from Silchester reduces the chances of the bid from the Fortress consortium succeeding on its current terms. Fortress needs 75% of investors to back the 254p-a-share deal at a meeting scheduled for August 16.
IMF forecasts 6% global growth
The International Monetary Fund (IMF) has upgraded its economic outlook for the world´s wealthy countries as vaccinations help them rebound from the pandemic – but has downgraded its forecast for poorer nations. Overall, the IMF expects the global economy to expand 6% this year – marking a sharp bounce-back from the 3.2% contraction recorded in 2020. However, while advanced economies are expected to see growth of 5.6% in 2021 – up from a forecast of 5.1% in April - emerging market and developing countries are now expected to post growth of 6.3%, down from April’s forecast of 6.7%. In the update to its World Economic Outlook, the IMF expressed concern that any major resurgence of inflation could drive central banks to raise interest rates, warning that this could threaten the global recovery. The report added that the IMF expects inflation to return to pre-pandemic levels in most countries in 2022. Among the forecast revisions for this year, the largest upgrade is for the UK to 7%. Britain is also predicted to have the joint fastest growth of the G7, together with the US.
Call to extend Brexit support fund
The Federation of Small Businesses (FSB) has called on the Government to extend a £20m fund to support companies struggling with post-Brexit EU trading. The SME Brexit Support Fund was launched in February and encouraged firms that traded with the EU to claim up to £2,000 each to help pay for training and professional advice so “they can continue trading effectively with the EU”. HMRC said that the fund, which closed to new applicants on June 30, had provided £6.8m in grants to 4,376 businesses. Around 15,000 firms had registered an interest in the scheme, with 5,414 applying for £8.5m in funding. In a recent report the FSB said that “there is still high demand from small firms for advice and support as they adapt to changes to the UK-EU trade relationship.” Liam Smyth, director of trade facilitation at the British Chambers of Commerce, added that businesses had to “jump” through too many “hoops” to claim the support.