BANKING
First-time buyer mortgages make market return
First-time buyers have been given a boost, with deals for those with small deposits reappearing in the market. Recent months have seen a steep reduction in deals for homebuyers with deposits of 5% and 10%, while rates have risen amid economic uncertainty brought about by the coronavirus crisis. Bank of England figures show that the average two-year fixed rate for a 90% mortgage jumped from 2.05% in January to 3.55% in October. However, buyers will be encouraged to see that TSB and Atom have joined Yorkshire Building Society in launching a range of 90% loans, while Virgin Money has cut its rates and Nationwide and Co-op Bank-owned Platform have announced plans to scrap restrictions on gifted deposits. Chris Sykes of mortgage broker Private Finance says the return to low-deposit lending shows banks believe the housing market has almost weathered the storm of the pandemic. However, Simon Cutler of financial adviser Blackdown Financial warns that it is “more like a temporary change of mood to entice new borrowers for a short time”.
INTERNATIONAL
Credit Suisse names Horta-Osorio chair
António Horta-Osorio, outgoing chief executive of Lloyds Banking Group, is to take over as Credit Suisse chairman. Urs Rohner, outgoing chairman of Credit Suisse, said: "I am extremely happy that we can propose a highly proven and recognised professional of the international banking business as my successor.” Mr Horta-Osório said: "I look forward to working closely with the board and management team to build on the group's many strengths. This is a time of great opportunity for the group, its people, clients and shareholders." He will leave Lloyds on April 30 next year to take on his new role on May 1. Lloyds yesterday announced that HSBC’s Charlie Nunn is to succeed Mr Horta-Osorio. Meanwhile, Credit Suisse yesterday said it was facing $680m in potential losses from a civil suit over residential mortgage-backed securities in the US.
Canadian banks beat estimates
Bank of Nova Scotia and Bank of Montreal (BMO) have beaten analysts' estimates for fourth-quarter profit, having set aside less capital than expected to cover potential loan losses from the COVID-19 pandemic. Impaired loans as a percentage of total loans at both Scotiabank and BMO stood at 0.8%, compared with 0.8% and 0.6%, respectively, a year ago. BMO posted provisions for credit losses of C$432m, versus estimates of C$712.7m. Scotiabank reported loan loss provisions of C$1.13bn, compared with analysts' expectations of C$1.44bn.
Mustier stepping down from UniCredit
Jean Pierre Mustier is stepping down as chief executive of UniCredit, Italy's biggest bank. He will remain in the role until the end of his mandate in April or until a successor is appointed.
FINANCIAL SERVICES
Buy now, pay later lenders reject 'code of conduct'
Two of the biggest buy now, pay later firms operating in the UK market have rejected a proposed code of conduct designed to offer greater protection to consumers. Laybuy has launched an industry code of conduct that seeks to establish a minimum standard across the sector, saying firms should present terms and conditions more clearly and apply strict financial assessments of potential customers. It also says consumers should be given access to an independent resolution service. However, rivals Klarna and Clearpay have rejected the guidelines. A Klarna spokesperson said the firm “did not believe a code of conduct was the right approach for this industry”, while Clearpay said it was awaiting the results of a Financial Conduct Authority (FCA) review that could bring formal regulation. The FCA has commissioned a review of unregulated credit which is expected to be completed early next year and could see the City watchdog ask the Government to expand its remit to cover buy now, pay later.
Axa to focus on health as it sets out latest strategy
Axa has announced that its health and protection insurance revenues are expected to increase 5% a year between now and 2023, as it seeks to focus on online health platforms.
HEALTHCARE
Astrazeneca sells cholesterol drug sale to Gruenenthal
The rights to Astrazeneca blockbuster cholesterol drug Crestor are to be sold to German firm Gruenenthal for $320m (£240m), with the deal expected to close in the first quarter of next year.
MANUFACTURING
Manufacturing sees biggest jump in three years
Stockpiling ahead of the Brexit transition deadline prompted activity in Britain's manufacturing sector to rise at the fastest pace for nearly three years in November, the latest survey from IHS Markit/CIPS reveals. The manufacturing purchasing managers' index reading hit 55.6 last month, up from 53.7 in October on an index where a reading above 50 indicates growth. Fhaheen Khan, a senior economist at the manufacturers' group Make UK, said the survey pointed to a continued yet subdued expansion of the sector as orders slowly returned following the easing of restrictions.
MEDIA AND ENTERTAINMENT
Advertising sector predictions revealed by GroupM
Forecasts from media buying agency GroupM reveals that digital advertising growth is expected to rise 5% to £14.5bn in 2020 before increasing 12% to £16bn next year. Total advertising spend is expected to rise by 6% to £25bn, 5% to £26bn and 5% to £28bn in 2022, 2023 and 2024.
REAL ESTATE
House prices up 6.5%
Figures from Nationwide show that house prices are 6.5% higher than a year ago, with this the steepest increase since January 2015. Month-on-month, prices climbed 0.9% in November, hitting an average of £229,721. Nationwide research shows properties in national parks carried a 20% premium when sold, with homes on the outskirts of these areas also selling for 6% more than equivalent property elsewhere. Looking to what the future holds, Nationwide chief economist Robert Gardner said that the outlook remained “highly uncertain” and suggested housing market activity is likely to slow in the coming quarters, especially once the stamp duty holiday expires at the end of March 2021. Andrew Wishart, a property economist at Capital Economics, expects to see a 5% drop in house prices next year – but not a house price crash.
RETAIL
Debenhams set for liquidation
Department store chain Debenhams is to be wound down after Christmas, with the loss of up to 12,000 jobs and closure of 124 stores. The first branch closures are expected in the new year, with all expected to close down by the end of March. Debenhams has been trying to find a buyer but its administrators have not received “a deliverable proposal”. JD Sports had been in talks over acquiring the chain but withdrew after Arcadia – which operated more concessions in Debenhams than any other retailer - collapsed into administration.
ECONOMY
OECD: UK economy to contract by 11.2%
The latest economic outlook report from the Organisation for Economic Cooperation and Development (OECD) suggests the UK’s post-pandemic economic recovery will lag behind every other major economy, bar Argentina. The OECD report forecasts that the UK economy will contract by 11.2% this year, with this steeper than the 10.1% fall in GDP it predicted in September. The OECD also downgraded its forecasts for UK growth to 4.2% in 2021, from 7.6% three months ago. The OECD said that, alongside the coronavirus crisis, Brexit poses a threat to growth, suggesting failure to secure a trade deal with the EU would see “serious additional economic disturbances in the short term” and have a “strongly negative effect on trade, productivity and jobs in the longer term”. Overall, the OECD said the global economy is set to shrink by 4.2% this year before rising 4.5% in 2021 and a further 3.75% in 2022.
OTHER
Three-quarters of SMEs plan to invest
Research from Barclaycard Payments shows that 74% of SMEs are planning to invest in their business next year. The poll reveals that 66% of smaller firms felt more prepared for November's England-wide lockdown than they were for the initial shutdown in March. While 36% said they were more mentally prepared, 32% said they had made changes to their business that had made it more resilient – with almost half of SMEs having boosted their online presence amid the pandemic.