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Daily News Roundup: Wednesday, 3rd February 2021

Posted: 3rd February 2021

BANKING

Banks fear tax raid as Chancellor balances the books

Analysts at UBS believe Rishi Sunak could launch a tax raid on banks as he looks to tackle the UK’s record deficit. With the Chancellor seeking to balance the books after public finances took a hit from the coronavirus crisis, there is speculation he could look to readjust corporation tax. With a Conservative manifesto pledge preventing Mr Sunak from increasing income tax, national insurance and VAT, UBS analyst Jason Napier said there is concern that “as governments come to balance budgets” in the wake of the pandemic, the banking sector “could appear an attractive source of funds.” Mr Napier says banks’ administration of Bounce Bank Loans that are 100% guaranteed by taxpayers are an area of concern, saying that if lenders are considered to have been deficient in applying controls to funds advanced under cover of government guarantees, “we see the risk of increased taxation or levies applied.”

Virgin Money sets aside extra £18m in loans provision

Virgin Money has set aside an additional £18m this quarter as it seeks to protect its balance sheet from potential loan losses. It also wrote off another £27m of loans in the final three months of 2020 - taking its total loan losses since October 2019 to £161m. This came as it announced a return to statutory profit in the first quarter of its financial year, having seen a £168m loss in 2020. Virgin Money said customer deposits increased by 0.9% to £68.1bn in the three month period. Chief executive David Duffy said Virgin Money had a “profitable and positive first quarter” and remained “well capitalised”.

Scams surge

A record number of bank scams were recorded in 2020, with a 66% increase in the value of fraudulent activity in the second half of 2020 against the first six months. The highest value claims came from investment and impersonation scams, each making up 29% of the total. Barclays said the increase was driven by high-value and complex scams, with criminals cashing in on uncertainty during the coronavirus pandemic.

One in five bank users visit branches monthly

A poll for the Mail by Consumer Intelligence shows that 18% of people visit a local bank branch on a monthly basis. However, two in five face a trip of at least three miles to their branch, with almost one in five living more than five miles away and 7% more than ten miles from their branch. It was also found that one in five of the more than 1,000 banking customers polled say they have felt pressured to switch to online and mobile services by their bank.

Metro Bank acquires RateSetter portfolio

Metro Bank is to purchase £384m in loans from peer-to-peer investors through the RateSetter platform, with CEO Daniel Frumkin describing the move as a “further step towards growing our presence in the unsecured lending market.”

INTERNATIONAL

Mediobanca’s Cairn Capital to take over distressed debt firm Bybrook

Distressed debt firm Bybrook Capital has been bought by a group controlled by Milan-headquartered lender Mediobanca for an undisclosed amount, with Mediobanca to remain the group’s majority shareholder.

Elliott urges Sampo to jettison Nordea stake

Activist investor Elliott has urged financial group Sampo to ditch its 15.9% stake in Nordea, saying it should focus entirely on its core insurance business.

Berlin to give watchdog 'bite' in wake of scandal

Reform of Germany’s financial regulator following the Wirecard scandal will see the creation of a financial task force that will be able to conduct forensic audits of companies suspected of fraud.

FINANCIAL SERVICES

City watchdog set to regulate BNPL

The buy now, pay later (BNPL) sector faces tighter regulation, with the Government announcing that such agreements are set to be regulated by the Financial Conduct Authority (FCA). This comes on the back of a review of the £2.7bn sector by the former FCA interim chief executive Chris Woolard which warned that under buy now, pay later it would be easy for people to build up unseen debts and called for urgent changes. The review found that one in 10 people using such services already had debt arrears elsewhere. Mr Woolard said that while buy now, pay later was convenient for some people, for others it was "a really easy way to fall into problem debt". Bringing firms such as Klarna, Clearpay and Laybuy under the FCA’s regulation means they will have to conduct proper affordability checks before lending and ensure customers are treated fairly if they are struggling to repay the loans. The move will also give consumers the right to take complaints to the Financial Ombudsman Service. The Treasury said it expects to act on Mr Woolard’s recommendations as soon as possible, with John Glen, the Economic Secretary to the Treasury, saying BNPL products will be brought under FCA regulation “as a matter of priority” following consultation.

LEISURE AND HOSPITALITY

Online slot machines face restrictions

The Gambling Commission has instructed online casinos to implement reforms to their slot machine games, specifically to slow them down and remove features that disguise how much users are spending. Gambling Commission chief executive Neil McArthur remarked: “The evidence shows that these features increase the risk of harm to customers.” Sports Minister Nigel Huddleston said the measures “will help curb the intensity of online gambling, introducing greater protections that will reduce the risk of gambling related harm.” Michael Dugher, chief executive of industry lobby group the Betting and Gaming Council noted that members have already introduced several measures to address issues which have caused concern.

Entain makes offer for Australia’s Tabcorp

Entain has made a bid for betting firm Tabcorp Holdings’ wagering and media operations as the Bwin and Coral owner seeks to expand its services in Australia. It currently operates the Ladbrokes and Neds International brands in that market.

Tucan Travel goes into administration

Tour operator Tucan Travel has collapsed into administration after business was hit by the coronavirus pandemic. Administrators will contact the 850 customers with bookings to inform them how they can get their money back.

MEDIA AND ENTERTAINMENT

CMA part-blocks Viagogo takeover of StubHub

The Competition and Markets Authority (CMA) has instructed ticket resale website Viagogo to sell StubHub’s operations outside North America, with inquiry group chair Stuart McIntosh saying evidence shows that Viagogo selling StubHub’s international business “will resolve our competition concerns, effectively and proportionately.” Viagogo welcomed the ruling, saying: “We are pleased to have found a remedy that is acceptable to the CMA that will allow everyone involved to move forward with clarity and certainty.”

REAL ESTATE

Nationwide reports reduction in house prices

Nationwide data shows UK house prices fell last month, with demand declining as the end of the stamp duty holiday nears. Figures from the building society show that the average price of a house was down 0.3% to £229,748 between December and January, while the annual growth rate eased to 6.4% from 7.3% - the first time it has slowed since June. Nationwide’s Robert Gardner has warned that housing activity could drop “sharply” as the tax break ends on March 31, saying: “The slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.”

Sunak urged to rethink property tax

The Chancellor has been urged to scrap council tax and stamp duty and replace them with a single new property tax, with campaigners claiming the move would save households an average of £435 a year. The Fairer Share pressure group suggests the levy could involve a flat rate of 0.48% on the current value of a property. While it acknowledged this could hit households in London, with those in the capital paying more due to the "extreme" rises in house prices, it said people in the north and Midlands would see savings, with this helping the Government’s “levelling up” efforts.

Covent Garden estate value declines

The value of Capital & Counties' central London Covent Garden estate has fallen by some £275m during the second half of 2020 to £1.8bn.

RETAIL

Brits add £50 to grocery bills

Analysis suggests that the average British family spent £50 more on groceries in January, with £1bn in extra spending on food and drink in supermarkets recorded in the four weeks to 24 January when compared with the same period in 2020. This was driven by the latest coronavirus lockdown which has seen restaurants and cafes – as well as schools - shut. It was also shown that the closure of pubs helped drive alcohol sales in supermarkets up by 29%, or £234m. The analysis also shows an increase in online grocery shopping, with online sales accounting for 14% of total takings, up from just under 13% in December. Across all retailers, grocery sales rose by 12.2% year-on-year during the 12 weeks to January 24, up from the 11.4% reported the previous month.

Bezos to step down as Amazon CEO

Amazon founder Jeff Bezos is to step down as chief executive and will become executive chairman. He will be replaced by Andy Jassy, who currently leads Amazon Web Services, Amazon's cloud computing business. Amazon said the changeover will take place in the second half of 2021.

SPORT

January transfer spend lowest since 2012

Premier League clubs spent £70m during the January transfer window, the lowest total in a winter window since 2012 and far below the £230m spent in January 2020.

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