BANKING
Majority of UK finance firms reduced pay gap last year
Pay gap data disclosed by UK finance firms broadly showed a narrowing of the gap between what they paid women and men in 2022, according to Reuters. Several banks, including HSBC, Morgan Stanley, Goldman Sachs and Standard Chartered reported a minor widening of the mean average gap for the year. All four banks said in their gender pay gap reports that the figures reflected the under-representation of women in senior roles and that they were taking steps to address this. Half of the twenty firms reviewed reported varying detail on ethnicity pay gaps while all the employers said they were taking steps to improve diversity, particularly at senior levels.
Big banks plot to axe 8 in 10 branches, insiders say
Banking insiders say a further 4,000 branches could be closed this year and next as High Street giants radically remodel the way they provide their services. There are currently 5,500 bank and building society branches countrywide with nearly 5,000 bank branches having disappeared since 2015. Insiders say the banks are waiting for legislation on access to cash to be passed later this year by Parliament, after which they will use the regulatory focus on banking hubs to strip their branch networks down to the bare bones.
Clearbank triples revenues to £58m
London’s first new clearing bank in 250 years, Clearbank, reported a tripling of revenues last year, to £58m, as financial firms sought its Bank of England-backed deposits amid market turmoil and sharp rate hikes. The fintech firm holds all its customer funds at the Bank of England and finance chief Mark Fairless said that market uncertainty in the past year had sparked a flood of deposits.
Hampden & Co enjoys first-ever annual profit
Hampden & Co, the Edinburgh-based private bank, has hailed its first full-year profit as well as record lending in 2022. The bank revealed, after previously flagging a record first half, that its total income notched up in 2022 was £23m, a year-on-year jump of 73%. Its profit before tax came in at £2m, and taking into account a deferred tax credit totalled £6.9m.
INTERNATIONAL
Credit Suisse chair re-elected after apology to investors at bank’s final AGM
Axel Lehmann was re-elected as chairman at Credit Suisse’s AGM on Tuesday and all seven directors who had not stood down before the AGM had their mandates renewed. Of the votes cast, 55.67% were in favour of keeping Lehmann chairman for the remainder of the time until the Swiss bank is officially merged with rival UBS. However, shareholders rejected a proposal to collectively pay executives up to 34m Swiss francs (£30m) over the next year, leaving their remuneration in doubt. Lehmann apologised to shareholders for the collapse of the 167-year-old Swiss bank, stating: “It is a sad day. For all of you, and for us.” But investors were livid, accusing bosses of incompetence and greed and of jeopardising trust in the Swiss financial sector.
Jamie Dimon says regulations stoked banking turmoil
Regulators have been criticised by JPMorgan boss Jamie Dimon in the wake of the banking turmoil for incentivising banks to load up on government securities and imposing flawed stress tests. In his annual letter to shareholders, Dimon points out that the stress testing devised by the Federal Reserve Board…never incorporated interest rates at higher levels” urging regulators to consider a “less academic, more collaborative reflection of possible risks that a bank faces.” Dimon urged caution in policymakers’ response to the collapse of Silicon Valley Bank and Signature Bank, stating: “We should not aim for a regulatory regime that eliminates all failure but one that reduces the chance of failure and the odds of contagion.”
Frank founder charged with defrauding JPMorgan in $175m sale
Charlie Javice, the founder of a student finance website acquired by JPMorgan Chase for $175m in 2021, has been charged with fraud by US prosecutors who allege she inflated user numbers ahead of the sale.
FINANCIAL SERVICES
Rathbones buys Investec’s UK wealth management arm
Investec is selling its UK wealth management arm to Rathbones Group in an £839m deal that will create a London-listed wealth management group with roughly £100bn of funds under management. The deal, which is set to be completed in the fourth quarter, will see new Rathbones shares issued in exchange for 100% of Investec Wealth & Investment UK’s share capital. Investec will own 41.25% of the combined group, but with voting rights limited to 29.9%, and will offer banking services to clients of the enlarged company while Rathbones will provide wealth management products to customers of the lender. The deal will generate annualised cash synergies of at least £60m “driven primarily by cost savings as well as higher net interest income”, the two companies said. Commenting on the merger, Paul Stockton, chief executive of Rathbones, said: “The forces of consolidation have been weighing on the industry for some time. We’re all facing inflationary pressure, so there are a number of players in the market that will have the same sort of challenges.”
Royal London buys Aegon UK’s individual protection book
Royal London is set to acquire the individual protection book of Aegon UK, subject to court approval. Some 400,000 Aegon customers will see their life insurance, critical illness and income protection policies transferred to Royal London as a result of the sale. Royal London’s group chief executive Barry O’Dwyer said the advised nature of Aegon’s individual protection customer base makes it a “perfect strategic fit.
Aviva finalises £400m bulk annuity deal with Deutsche Bank
Aviva has completed a £400m bulk purchase annuity buy-in transaction with the trustees of the Deutsche Bank (UK) Pension Scheme. Jamie Cole, head of bulk purchase annuity origination at Aviva, said: “We are delighted to have completed this deal with Deutsche Bank, supporting them with the next tranche of their UK pension scheme de-risking strategy.”
Shorter life expectancy gives UK pensions an unexpected windfall
Billions could be slashed from the total liabilities of private sector defined benefit pension schemes after the latest modelling saw life expectancy assumptions at retirement age fall 1.9%, or six months.
HEALTHCARE
L’Oréal buys Australian skincare brand for $2.53bn
Australian skincare brand Aesop has been acquired by French cosmetics giant L’Oréal for $2.53bn. The deal is the latest in a series of acquisitions of smaller labels in the cosmetics sector. Nicolas Hieronimus, chief executive of L’Oréal, said Aesop’s products were “a superb combination of urbanity, hedonism and undeniable luxury”.
MEDIA & ENTERTAINMENT
TikTok fined for failing to enforce age verification tests
The Information Commissioner’s Office (ICO) has fined TikTok £12.7m for illegally having more than one million under-13s on its platform. John Edwards, UK information commissioner, said: “There are laws in place to make sure our children are as safe in the digital world as they are in the physical world. TikTok did not abide by those laws. As a consequence, an estimated one million under-13s were inappropriately granted access to the platform, with TikTok collecting and using their personal data. That means that their data may have been used to track them and profile them, potentially delivering harmful, inappropriate content at their very next scroll.”
UFC and WWE in $21bn fight club tie-up
Ultimate Fighting Championship and World Wrestling Entertainment are to merge creating a $21bn wrestling and entertainment business controlled by Endeavor, the owner of UFC. Endeavor will own 51% of the new business, which has yet to be named. The co-founder of WWE, Vince McMahon, said the tie-up “is the best outcome for shareholders and other stakeholders.”
REAL ESTATE
Hammerson under siege from biggest shareholder
Lighthouse, the investment vehicle of former Hammerson director Desmond de Beer and one of the biggest shareholders in Hammerson, is demanding the shopping centre owner accelerate asset sales and resume dividend payments ahead of its annual meeting next month. Lighthouse, which holds nearly 23% of the Brent Cross-owner, said it did "not have confidence in the Hammerson board as currently constituted, having regard to the operational and strategic weaknesses reflected in Hammerson".
SPORT
Premiership Rugby losses nearly double
Premiership Rugby’s losses nearly doubled from £19.03m in 2021 to £36m last year, accounts published by Companies House show. Premier Rugby Ltd said the loss was expected and “is to do with the accounting treatment of the CVC Capital Partners investment in that period, as opposed to reflecting operating performance.”
ECONOMY
Bank of England’s chief economist hints at May interest rate rise
Huw Pill, the chief economist at the Bank of England, told an audience in Geneva on Tuesday that a further interest rate rise could be needed in May to ensure inflation is pushed back down to target. “The onus remains on ensuring enough monetary tightening is delivered to ‘see the job through’ and sustainably return inflation to target,” Pill said. However, he said the Bank needs to remain “vigilant to signs of tightening financial conditions and be prepared to respond to the macro implications of any dislocation to credit markets to the extent that they influence the outlook for inflation.” Separately, Silvana Tenreyro, an external member of the MPC, said the Bank will have to cut rates sooner to make sure inflation does not fall below its target of 2%, arguing that inflation was now primarily driven by supply-side shocks, which are easing. “As the effects of the large and rapid tightening in policy gradually come through over the course of 2023 and 2024, this is likely to drag demand well below its potential, loosening the labour market and pulling down on inflation,” she said. “The high current level of Bank Rate will require an earlier and faster reversal, to avoid a significant inflation undershoot,” she added.
OTHER
IMF issues warning over non-bank entities
The International Monetary Fund (IMF) has called for tighter regulation of non-bank institutions arguing that weaknesses had emerged after a period of cheap money. A report from the IMF suggested higher global interest rates could trigger more financial crises in the coming months. “Recent strains at some banks in the US and Europe are a powerful reminder of pockets of elevated financial vulnerabilities built over years of low rates, compressed volatility and ample liquidity,” the report read. “Such risks could intensify in coming months amid the continued tightening of monetary policy globally, making it especially important to understand and safeguard this broad swath of the financial sector that comprises an array of institutions beyond banks.” The IMF said the growth of non-bank financial intermediaries had accelerated after the 2008 global financial crisis and that they now accounted for almost 50% of global financial assets. “As such, the smooth functioning of the non-bank sector is vital for financial stability.”