BANKING
Santander first UK bank to drop requirement for 2:1 degree
Santander UK is dropping the requirement for graduates applying to work at the bank to achieve a 2:1 degree or higher, as part of efforts to boost the socioeconomic diversity of its recruits. The lender said the change would lead to an extra 64,000 applicants being eligible for its annual graduate scheme and reflected the fact that university performance did not guarantee success in the workplace. "Academic achievement is important, but it is only one of many factors we look at when searching for new talent," Santander's HR director, Anouska Ramsay, said. "We believe potential can be found anywhere and this move reinforces our commitment to finding the best candidates from a wide range of backgrounds." The move comes after other City firms, including consulting giant PwC and asset manager Schroders, scrapped similar academic requirements for graduate staff last year. However, Santander is the first UK bank to implement such a policy.
Banks need financial prod to tackle climate change, warns chief supervisor
Dietrich Domanski, the outgoing secretary-general of the Financial Stability Board, told the FT that banks may need the threat of a global carbon tax to incentivise action to counter climate change.
PRIVATE EQUITY
Private equity poised to deploy €270bn of capital
Peel Hunt estimates that European private equity funds are sitting on €270bn of dry powder following a period of record fundraising. The broker now believes financing conditions for deals are starting to improve. "Potential acquirers of UK plcs have accepted that the cost of debt has structurally increased and that near-zero rates are unlikely to be seen again soon, if ever," Peel Hunt said. "Uncertainty over rates has been the critical factor undermining deal volumes, as investors cannot reliably model returns on investment without clarity over the funding structure. However, in recent weeks there have been some signs of stabilisation of expectations for rates over the medium/longer term, combined with economic signals that inflation might be coming under control."
INTERNATIONAL
Regulators in the US warn banks of crypto risks
US regulators have issued a joint statement warning of the risks of banks holding cryptocurrencies following several recent failures of major crypto firms. The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency highlighted fraud and scams, market volatility, legal uncertainty, and weak risk-management and governance practices at crypto firms, among other things, as reasons for concern. “It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system,” the regulators said. Based on their experience, they said, issuing or holding cryptocurrencies “is highly likely to be inconsistent with safe and sound banking practices.”
Kentucky warns JPMorgan, Citi and Blackrock over ESG boycotts
Lawmakers in Kentucky are joining other US states such as West Virginia and Texas in divesting from financial firms which boycott energy companies. Kentucky warned almost a dozen firms, including Citigroup, JPMorgan Chase and BlackRock of potential divestment if they fail to cease their increasingly aggressive environmental, social and governance (ESG) practices.
GS consumer banking unit head steps down
The head of Goldman Sachs’ direct-to-consumer unit, Swati Bhatia, is stepping down from the role, according to an internal note seen by Reuters.
AUTOMOTIVE
Hyundai aims for 10% rise in global sales
The South Korean carmaker Hyundai has said it aims to increase global sales by 10% this year, as the company accelerates its transition to electric vehicles.
FINANCIAL SERVICES
Sam Bankman-Fried pleads not guilty to criminal charges over FTX
FTX founder Sam Bankman-Fried has pleaded not guilty to US criminal charges over the collapse of his crypto exchange and partner trading arm Alameda Research. Mr Bankman-Fried is facing eight counts of wire fraud, security fraud and conspiracy to commit money laundering, and campaign finance violations. Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang last month admitted charges relating to the FTX collapse and are cooperating with authorities. Bankman-Fried is also facing a civil fraud case brought by the Securities and Exchange Commission and further claims of fraud from the Commodity Futures Trading Commission.
Regulator slaps record fine on H2O over Windhorst-linked investments
The French asset manager H2O has been fined a record €75m by the Autorité des Marchés Financiers (AMF) and banned its co-founder Bruno Crastes from the industry for five years over investments in illiquid debt linked to controversial German financier Lars Windhorst. Crastes was also fined €15m while group CIO Vincent Chailley was fined €3m and reprimanded. The enforcement committee of the AMF criticized H2O’s “deliberate choice” to select illiquid investments for its suite of funds “in breach of many rules,” ultimately compromising investors’ ability to exit at any time.
A GBP stablecoin could be a game changer
Stratis founder and CEO Chris Trew advocates for a GBP stablecoin in City AM. Such blockchain-secured tokens that track a fiat currency’s value provide a range of possibilities, including cheaper and perhaps transaction fee-free transfers, more rapid payments within apps leading to improved payment features for the digital economy. Stratis has a proposal for a Great British Pound Token (GBPT) being considered by the Financial Conduct Authority. Trew says the GBPT would use the Open Banking standard so that both companies and individuals are able to deposit fiat via a simple webpage in order to mint GBPT. The UK needs to step up and take advantage of blockchain technology and its application for tokenisation, urges Trew.
Julian Sawyer appointed CEO of Zodia Custody
Starling Bank co-founder Julian Sawyer has been appointed CEO of crypto asset service provider Zodia Custody, a subsidiary of Standard Chartered. Sawyer is jumping across from his previous position as CEO at the cryptocurrency exchange Bitstamp and is renowned for scaling up financial services companies.
Reinsurance costs rise up to 200% as Ukraine war and extreme weather bite
Extreme weather events along with the conflict in Ukraine have driven up the cost of reinsurance by as much as 200% in January renewals, threatening to further fuel an increase in premiums.
Asset managers brace for tough year of cost-cutting in 2023
Asset managers are readying themselves for serious structural changes as last year’s fall in revenues and the need for tech upgrades drives more dramatic cost-cutting measures.
MANUFACTURING
UK falling behind on chip manufacturing
The boss of silicon chip designer IQE has warned that Britain could lose its allure as a technology hub to US and European rivals if it does not move quickly to attract semiconductor manufacturers. Americo Lemos says global moves to reshore production of the vital computer components from countries such as China are racing ahead of the UK. “This is the year for the UK to make a decision on whether we want to play our part in a new global semiconductor market or if we’re willing to let that opportunity slip away,” he added. The comments come after other industry figures and MPs took aim at the Government over its lack of action to strengthen the UK chip sector. MPs on the Business, Energy and Industrial Strategy Committee said of the efforts so far by the Department for Digital, Culture, Media and Sport: “It is not clear to us that the support currently offered by government is at anything like the scale which is needed to make a real difference, or in line with a clear strategy from ministers.”
MEDIA & ENTERTAINMENT
Cineworld seeks buyer for all assets
Cineworld has said it will begin the formal process of finding a buyer for the business this month as it battles to stay afloat. The cinema chain made the statement following claims its lenders had been in discussions with the company's larger US-based rival AMC about selling off some of its cinemas in the US and Europe. Shares slumped by around 23% in early trade Tuesday, although they later clawed back losses.
REAL ESTATE
Home REIT shares temporarily suspended
Trading in Home REIT shares have been suspended after the self-styled “landlord for the homeless” missed its annual accounts deadline as it works to meet an “enhanced set of audit procedures.” The more detailed report was ordered after Viceroy Research raised questions about a range of issues, including the valuation of Home REIT's properties and the ability of its tenants to pay rent. It has since faced further attacks from The Boatman Capital Research and faces a lawsuit from Harcus Parker for misleading investors.
University of California invests $4bn in Blackstone’s real estate fund
The University of California's endowment fund, which manages more than $150bn of assets, is to make a $4bn investment into Blackstone's Real Estate Income Trust (BREIT). The $69bn fund put limits on investor withdrawals last year after suffering heavy redemptions. The move, which will see the university hold its investment in BREIT for at least six years, is a vote of confidence in BREIT. In return, Blackstone will offer UC Investments $1bn of its own investment in BREIT as collateral if the university does not achieve a minimum 11.25% annualized net return through January 2028.
RETAIL
Aldi sales exceed £1.4bn in December
Aldi sales topped £1.4bn in the UK for the first time last month. The discounter, which overtook WM Morrison to become the UK’s fourth largest grocer by market share in September, reported a 26% annual increase in sales in December.
ECONOMY
Manufacturing output declines rapidly in December
The UK’s manufacturing sector recorded its fifth consecutive month of contraction in December and the lowest output in more than two years. The S&P/CIPS purchasing manager’s index fell to 45.3 from 46.5 in November, below the 50 mark that indicates growth. Manufacturers cited a slowdown in export demand, high energy costs, and Brexit-related trade disruption. December’s survey data showed declines in all five sub-indexes including output, new orders, jobs, and stock levels, making it one of the worst months for factories since 2009. “Output contracted at one of the quickest rates during the past 14 years, as new order inflows weakened and supply chain issues continued to bite. The decline in new business was worryingly steep, as weak domestic demand was accompanied by a further marked drop in new orders from overseas,” said Rob Dobson, director at S&P Global Market Intelligence.
OTHER
Cashless Denmark records zero bank robberies
Denmark has recorded its first ever year without bank robberies following a steady decrease in the use of cash in the country. There were 221 bank robberies in 2000, falling to 121 in 2004, before declining to one in 2021 and none last year. There were also no attacks on Danish ATM machines for a second year running in 2022, a spokeswoman for Finans Danmark, an industry association, said.