PSR calls for more competition in credit card market
The UK's payments regulator, the Payment Systems Regulator (PSR), is calling for more competition in the credit card market. The PSR is conducting two major reviews of card systems, focusing on scheme and processing fees, as well as cross-border interchange fees. The regulator believes that open banking and the renewal of existing infrastructure for account-to-account payments could unlock the market to greater competition. Chris Hemsley, managing director of the PSR, stated that this could lead to more choice and better services for businesses. Visa and Mastercard, which control the UK market, have been asked to provide the PSR with documents relating to the fees they charge customers. However, MPs have suggested that progress in open banking has been hindered by vested interests. The PSR is also working on mandatory fraud reimbursement, with revised proposals giving the regulator enforcement powers to ensure compliance by banks. The rules are expected to be in place by the end of March.
Quant makes BoE's CBDC infrastructure available
Blockchain finance platform Quant has made the infrastructure used in the Bank of England's CBDC test project available to businesses. The Overledger Platform, which has been used in Project Rosalind, is now accessible to large enterprises, SMEs, and developers. It allows customers to issue digital money and interoperable assets, move them between blockchain networks, write new apps, create secure smart contracts, and integrate with existing systems. Martin Hargreaves, Chief Product Officer at Quant, stated that the platform simplifies the use of blockchain technology, making it accessible to everyone. Gilbert Verdian, founder and CEO of Quant, emphasized the transformative value of blockchain in the financial world and described Overledger as a game-changer for businesses in the blockchain economy.
VC investors brace for tough year ahead
An extended period of high interest rates in the UK is hampering a rebound for venture capital investment, analysts have said. UK venture investment plunged 25% to £24bn last year as rate hikes pushed up the cost of cash. Now researchers expect to have to rely on private equity funds to keep a liquidity flowing until confidence returns. But if PE funds decide to sit on their on their cash, next year could prove to be a tough one.
EU reaches deal on final batch of tougher bank capital rules
The European Union has reached a deal to implement the final batch of tougher bank capital rules, including safeguards for the crypto sector. The deal, known as Basel III, includes limits on banks using their own internal models to calculate capital buffers. The agreement also addresses concerns over bank capital and liquidity. The EU deal phases in elements of Basel III from 2025 and includes measures to protect banks from crypto sector risks and improve reporting on fossil fuels. It tightens requirements for EU branches of non-EU banks and enhances supervision of their activities in the bloc. The EU is the first major jurisdiction to reach a deal on Basel III, ahead of the UK and US. "This is a major step forward which will help ensure that European banks can continue to operate also in light of external shocks, crises or disasters," said Elisabeth Svantesson, minister of finance for Sweden, which holds the EU presidency.
UBS to halve Credit Suisse workforce
UBS is reportedly planning to cut more than half of Credit Suisse's workforce as a result of the bank's takeover. Bankers, traders, and support staff in Credit Suisse's investment bank in London, New York, and parts of Asia are expected to be most affected. UBS intends to eventually reduce the total combined headcount by about 30%, or 35,000 people. As many as 10,000 jobs could be cut if the Swiss domestic businesses of the two banks are merged.
Italy's competition authority urges banks to better reward depositors
Italy's competition authority has urged banks to better reward depositors as inflation erodes the value of savings. The authority's head, Roberto Rustichelli, highlighted the need for banks to engage with their customers and increase remuneration on deposits and savings.
Bank of America expands into four more states
Bank of America is expanding its consumer branches in four new US states, bringing its national footprint closer to rival JPMorgan Chase. The bank will open new financial centres in Nebraska, Wisconsin, Alabama, and Louisiana as part of a four-year expansion across nine markets.
Former Fed official teams up with ex-SVB risk officer to launch bank
Former banking regulator Randal Quarles and Vivek Tyagi, an ex-risk officer at SVB, have teamed up to open Currency Reserve, a new bank that will focus on delivering dollars to banks outside the US.
Brexit rules and EV rollout failure could cost £100bn
A new report from the Society of Motor Manufacturers and Traders (SMMT) suggests fractured supply chains for electric cars and looming post-Brexit tariffs could cost the UK’s car industry over £100bn in growth. Mike Hawes, SMMT’s chief executive, said: “The Government has set the industry tough targets and we are committed to meeting them. But we are in the middle of the most fiercely competitive investment landscape of a generation and need a UK response, urgently, using every policy, every fiscal and regulatory lever, to make Britain the most attractive place to invest.”
UK and EU sign deal on financial services
UK Chancellor Jeremy Hunt visited Brussels on Tuesday to sign a Memorandum of Understanding (MoU) on financial services. The agreement, signed by Mr Hunt and EU financial services commissioner Mairead McGuinness, will see greater cooperation between officials from the EU and the Treasury. The new deal allows officials to discuss regulatory changes, international developments and risks to financial markets. It will also allow both sides to coordinate positions ahead of G7, G20 and other summits. However, the MoU will not restore access to the single market or prejudge decisions on equivalence, where one side recognises the other’s regulations. The Treasury said that the memorandum will allow the parties to "coordinate positions where appropriate on issues ahead of G7, G20 and other international meetings". Chris Cummings, chief executive of the Investment Association, said the deal was “an important milestone” while Treasury minister Andrew Griffiths described it as a "momentous day in the history of British and EU relations".
Wise shares soar after profits surge
London-listed fintech firm Wise saw its shares surge 17% yesterday after reporting a 234% boost in profits over the past year on the back of rising interest rates, which offset a decline in the size of transfers by customers. The money transfer firm saw profits rise from £43.9m in 2022 year to £146.5m in 2023. CFO Matt Briers said the firm would use the income to “power further profitable growth” by investing the cash in the Wise Account proposition.
CAB Payments eyes £850m IPO
CAB Payments, which specialises in payments services for emerging markets, is hoping to fetch a price tag of more than £850m next month when it floats in London. CEO Bhairev Trivedi said the valuation was a compelling offer price. “We have been pleased with the investor engagement so far and are excited to continue to meet the institutional and retail investment community over the next week,” he added.
LEISURE & HOSPITALITY
David Lloyd Leisure up for sale for over £2bn
David Lloyd Leisure, one of Britain's biggest upmarket health and racquet sports chains, is reportedly up for sale for over £2bn. The group's owners, TDR Capital, are reviewing their options and have engaged Morgan Stanley to explore potential offers. David Lloyd runs 150 clubs in the UK and Europe employing 8,000 staff.
High mortgage rates forcing sellers to accept lower offers
An increasing number of property sellers are having to accept lower offers on their homes because of higher mortgage rates and the cost of living crisis. Reseaerch by Zoopla shows 42% of sellers are agreeing to discounts of 5% or more on asking price – the highest level for five years, while 15% of those trying to sell their home were accepting discounts of more than 10% on the initial asking price. Meanwhile, annual house price growth slowed to 1.2% in June and Zoopla predicted a return to “modest” quarterly house price falls in the second half of 2023.
Boots to close 300 UK pharmacies
The US-owners of Boots the Chemist is to close 300 of its branches throughout the UK over the next 12 months. Walgreens Boots Alliance said on Tuesday that there will be no redundancies and staff will be offered work at nearby stores. The company said it will "consolidate" branches that are close to each other. There will be 1,900 branches left across the UK from a base of 2,200. Retail sales were up by 13.4% in the three months to the end of May, compared with the same period last year, while its essentials label saw volume growth of 40% as customers looked to save money.
MPC member accuses BoE of forecasting failures
Swati Dhingra, an economist who joined the Bank of England’s Monetary Policy Committee last year, has said the BoE’s poor forecasting has undermined its response to the cost of living crisis, extending the pain and hitting the institution’s credibility. Dr Dhingra, who wanted to hold interest rates at 4.5% this month, went on to point out that a fall in headline inflation should follow a fall in producer price inflation, for which there is some promising evidence. Dr Dhingra also said the drop in energy costs is trickling through the economy while labour-intensive industries are “seeing a levelling off to some degree of wage inflation” which is important for keeping consumer prices down. Separately, Nick Macpherson, a former permanent secretary to the Treasury, told the Lords economic affairs committee on Tuesday that the BoE’s QE programme was excessive and enabled inflation to take root. “I am worried that quantitative easing has given windfall gains to a section of society, who quite frankly don’t need those windfall gains – potentially at the expense of poorer people who have suffered the effects of inflation because they spend more on food, energy and rents,” he said.
Sam Bankman-Fried fails to dismiss criminal charges related to FTX
A New York judge on Tuesday denied motions to dismiss a suite of charges faced by FTX founder Sam Bankman-Fried, which include allegations of campaign finance violations and conspiracy to commit bank fraud. Other charges relate to wire fraud and conspiracy to commit money laundering as well as securities and commodities fraud and conspiring to bribe Chinese officials. The judge’s order comes a day after a report from John Ray, the former Enron administrator who replaced Bankman-Fried as FTX’s chief executive after it filed for bankruptcy, detailed how FTX executives “lied to banks and auditors, executed false documents, and moved the FTX Group from jurisdiction to jurisdiction, taking flight from the United States to Hong Kong to the Bahamas, in a continual effort to enable and avoid detection of their wrongdoing.”