Banks to commit to coal financing phase-out
HSBC, Lloyds and NatWest are to join an alliance aimed at phasing out the world's dependence on coal power, with the banks set to become signatories to the Powering Past Coal Alliance (PPCA) at the COP26 summit in Glasgow. They will be among ten financial institutions signing up to the PPCA, with asset management firms Fidelity International and Scor also signing up. The additions will take the number of institutional members of the alliance to 32. The news comes in a week when campaigners from the environmental group Market Forces criticised UK-based lenders for continuing to provide financing to fossil fuel projects in 2021. The report shows that since January, Barclays has financed more in fossil fuel projects than any of the UK's largest banks. The bank has financed $5.6bn for new fossil fuel projects since the start of the year. HSBC, meanwhile, has financed $5.3bn and Standard Chartered made $4.3bn available.
Standard Chartered sees profits surge
Standard Chartered's pre-tax profits have risen 44%, the bank’s latest quarterly results show. The Q3 data shows that pre-tax profits more than doubled to $996m in July-September from $435m a year earlier. Overall quarterly income rose 7% to $3.8bn from a year earlier. Q3 impairments were $107m, compared with $353m a year earlier. The bank expects impairments to remain low for the remainder of the year. Chief executive Bill Winters said Standard Chartered had made “progress against our strategic priorities” and hailed the “strong performance” seen in its financial markets, trade business and wealth management divisions.
Staley set for £22m in bonuses
Jes Staley is in line for bonus pay-outs worth up to £22m after quitting as chief executive of Barclays following a Financial Conduct Authority and Prudential Regulation Authority investigation into his links with disgraced financier Jeffrey Epstein. The former CEO is being treated as a "good leaver" and is in line for as many as 11.4m shares valued at £22.5m if the bank hits targets in coming years. In addition to the possible bonus payments, Mr Staley owns 5.7m shares in Barclays with a value of £11.3m.
Starling could be persuaded away from London listing?
Starling plans to float on the stock market but could be tempted away from London. CEO Anne Boden said the challenger bank wants to list on the public markets in “a year or two” but hinted a London listing is not set in stone. She said: “I very much hope we can do it in London” before offering: “I think that would be the default option, unless we're persuaded otherwise.”
Jefferies hires senior bankers for investment banking unit
Jefferies Financial Group has recruited senior bankers from rivals to strengthen its investment banking unit, according to an internal memo. Matthias Kristol, who previously led JPMorgan’s asset management, financial technology, and wealth management teams, will join Jefferies as global head of asset and wealth management investment banking. Aaron Bruker will join the bank as head of sidecars and third-party capital, having previously served as head of private capital for the financial institutions group at Barclays.
Goldman Sachs flags diversity among new managing directors
Goldman Sachs has promoted 643 people to managing director, the bank's second-highest rank behind partner. The bank said 30% of those promoted were women, a rise on the 29% recorded in 2019. Some 28% of those promoted were Asian, up from 26% in 2019, with the number of black staff promoted rising from 4% to 5% and the rate among Hispanic workers up to 5% from 2% in 2019. The data also shows 3% were from the LGBTQ+ community, compared with 2% in 2019.
VTB forecasts retail lending will grow 22%
Russia's VTB expects its retail lending portfolio to grow by around 22% in 2021, deputy chairman Anatoly Pechatnikov has said, a rate that would exceed the growth of 14.6% recorded in 2020. In the first nine months of 2021, state-run VTB's retail portfolio increased by 19.4% to 4.41trn roubles.
FCA delays implementation of new rules
The Financial Conduct Authority has delayed proposed changes to the Key Investor Documents (Kids) under the Packaged Retail and Insurance based Investments Products Regulation. While it had aimed to amend the UK version of the EU regulation by the end of this year, the City watchdog will now publish its policy statement in Q1 2022. The FCA will set out when the rules will take effect, along with any implementation period. Richard Stone, chief executive of the Association of Investment Companies, said: “We are encouraged that the FCA has listened to industry concerns and is taking its time to get the changes to Kids right.” He added: “This will give the regulator breathing space to consider how best to change Kids to help investors make better decisions.”
Listed firms will be forced to publish annual green plans
Chancellor Rishi Sunak will today announce that all companies listed on the UK stock exchange will be legally obliged to produce annual plans for becoming more green. The firms will have to produce regular “transition plans” for how they will help Britain reach net zero in carbon emissions by 2050, with the requirement set to be in place as soon as 2023. With the Financial Conduct Authority (FCA) to oversee the requirements, companies failing to publish these plans could face fines or be removed from UK stock markets. Ministers are to set up a task force, under the control of the FCA, that will set the standards under which companies are required to report under the new financial net zero reporting scheme. The Chancellor will also announce that more than 450 firms from the financial industry have signed up to climate change goals.
FOS agrees to review firms' early settlement offers
The Financial Ombudsman Service (FOS) is to review offers made by firms to their clients in early settlement cases, in light of concerns that taking a more neutral stance could jeopardise fairness and consistent outcomes. The FOS had proposed to present proactive offers from businesses ‘neutrally’ to customers, essentially making clear that in putting the offer forward, it could not confirm whether it thought the offer was fair or not. But financial businesses and organisations representing consumers expressed concerns this could inadvertently present a risk to fair and consistent outcomes for consumers, as well as impact the ultimate effectiveness of the initiative.
Sensyne for sale
Medical technology firm Sensyne Health has been put up for sale, with chief executive Lord Drayson pushing for a management buyout. Sir Bruce Keogh, chairman of Sensyne, said the board was "fully aligned with Lord Drayson's proposal to explore a management buyout as one route towards maximising value for all stakeholders". JPMorgan Cazenove and Peel Hunt are acting as advisers to Sensyne.
Prices across Europe will continue to climb
Analysis by S&P Global suggests the housing market across Europe is recovering from the pandemic faster than other sectors of the economy, with prices rising at the fastest pace since 2006. Prices across Europe were, on average, 6.9% up in Q2 compared to the same quarter in 2020. With demand set to outpace supply, S&P expects the rise in prices to continue over the next four years. The report says that lockdowns have limited spending and seen people accumulate more savings, meaning they have been able to pay larger deposits. S&P estimates that between Q1 2020 and Q2 2021, households in the eurozone accumulated around 6% of 2019's GDP in excess savings, while in the UK the rate was higher, at 9.4%. S&P expects house price inflation to have peaked in mid-2021 in most countries, with higher savings and loose monetary policy likely to fade. It notes that the end of the stamp duty holiday is contributing to a significant slowdown in price growth in the UK.
Recovery in consumer spending slows
While consumer spending has continued to bounce back post-pandemic, research by Nationwide shows that growth has started to slow. Between July and September growth in consumer spending hit 3%, marking a slowdown following the 14% increase recorded in Q2. The study, which looked at more than 620m transactions by Nationwide consumers, also revealed that spending on paying back debts was up 10% in Q4. Reflecting on the Q3 figures, Mark Nalder, Nationwide's head of payments, said they point to “a sense of belt-tightening”. He added that Nationwide expects the growth of spending to slow further, with the rising cost of living “likely to continue to bite consumers”. Meanwhile, a Nationwide survey has found that almost three-quarters of people are worried about the increasing cost of living, while a quarter are concerned about their finances. While 18% believe their spending to pay off debt will increase, 15% said the amount they spend on their mortgage or rent will rise in the coming months. It also saw 18% say they had relied on credit to get by more in the past few months than previously, while 36% are expecting to dip into their savings.
Inflation could add more than £180 to family food bills
Labour analysis of Office for Budget Responsibility (OBR) data shows family food bills could increase by more than £180 next year because of climbing inflation. The OBR has forecast that Consumer Prices Index inflation could rise to more than 4% in 2022, an increase that would add £3.50 to the cost of an average family's weekly food shop. Shadow Chancellor Rachel Reeves raised the issue during Treasury questions in the House of Commons, noting that alongside climbing food prices, energy bills are set to rise. She went on to argue that Chancellor Rishi Sunak had the opportunity to help people with their gas and electricity bills by reducing VAT to 0% in the Budget. Mr Sunak pointed to analysis suggesting cutting VAT on fuel bills would disproportionately benefit wealthier families.