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Daily News Roundup: Wednesday, 5th January 2022

Posted: 5th January 2022

BANKING

Mortgage approvals at 66k in November

Bank of England data shows that 66,964 mortgages were approved in November. While this was down on the 67,103 recorded in October, it exceeded the 65,400 forecast by real estate experts. Banks lent £3.7bn against homes in November, with this £2.9bn below the 12-month average to June 2021. Gross lending increased to £22.1bn in November, from £19.5bn in October, while gross repayments rose to £19.4bn from £18.2bn. Kimberley Gates of Sirius Property Finance said the decline recorded in November “should be viewed as a return to pre-pandemic normality rather than a sign of dwindling health and the market continues to defy expectation and exceed industry forecasts where top line performance is concerned.” The Bank of England report also revealed that approvals for remortgages rose to 44,500 in November, with this the highest number of remortgage approvals recorded since the 52,500 seen in February 2020 – the last month before the pandemic started to hit the sector.

Surge in demand for five-year mortgage deals

Demand for five-year fixed rate mortgages has surged to the point where they will soon overtake two-year fixes as the nation’s favourite home loan. According to UK Finance, just under half of borrowers are on five-year fixed rate deals,— a rise of more than 50% in four years. In 2017, it was three in ten. Brokers say borrowers are shunning two-year deals in favour of longer fixes amid growing anxiety about hikes in interest rates and the cost of living. The Bank of England raised the base rate from 0.1% to 0.25% last month, and inflation was at a ten-year high of 5.1% in the 12 months to November. The best five-year deal for those with a 40% deposit comes from Nationwide, while the cheapest two-year fixed rate for those with a 40% deposit is with Progressive Building Society. The cheapest ten-year fix with 60% LTV is with Halifax. Yorkshire Building Society offers a market leading deal for those with 25% equity and TSB leads the way for those with a 10% deposit.

Banks yet to up rates on easy access deals

The Mail’s Sylvia Morris reports that despite the Bank of England increasing the base rate to 0.25% almost three weeks ago, none of the UK’s big high street banks are paying savers more. She notes that while some banks are offering rates of up to 0.71%, savers will continue to earn just 0.01% on easy-access accounts with Barclays, Lloyds (including Halifax), HSBC and NatWest (including Royal Bank of Scotland). Ms Morris notes that these banks hold around two-thirds of the total £974bn that is in easy-access accounts. James Blower, founder of consultancy Savings Guru, says: “Big banks have so much cash they have no need to put rates up at all this year and likely beyond that.”

PRIVATE EQUITY

TPG prepares $1bn flotation

Private equity firm TPG is planning a New York flotation that could raise as much as $1bn, with shares set to be priced between $28 and $31. JPMorgan, Goldman Sachs, Morgan Stanley, TPG Capital and BofA Securities are the lead underwriters for the offering.

INTERNATIONAL

Former Swedbank CEO charged over money-laundering scandal

Birgitte Bonnesen, the former chief executive of Swedbank, has been charged with fraud, market manipulation and the unauthorised disclosure of inside information. Sweden's economic crime authority said Ms Bonnesen "repeatedly spread misleading information" that the bank did not have any issues with its anti-money laundering processes in Estonia. An official report commissioned by Swedbank found the bank had carried out €37bn of transactions with a high risk of money laundering between 2014 and 2019. Ms Bonnesen was sacked as CEO when the scandal came to light.

Bank of America hires veteran banker

Bank of America has hired veteran investment banker Benjamin Saunders as a managing director for its Americas Financial Institutions Investment Banking business. Mr Saunders, who has over 25 years of investment banking experience, was most recently the principal client coverage executive for New England and mid-Atlantic depository institutions at JPMorgan.

Wells Fargo chief risk officer to leave

Mandy Norton, Wells Fargo’s chief risk officer, is set to retire, CEO Charles Scharf has revealed in a memo to staff. Ms. Norton, who joined Wells Fargo from JPMorgan in 2018, will depart the bank at the end of June.

FINANCIAL SERVICES

Crypto and NFTs could face regulation crackdown

Digital investments such as cryptocurrencies and non-fungible tokens (NFTs) could face a regulatory crackdown in 2022, with MPs and campaigners calling for the Government to act. No agency is directly responsible for the regulation of crypto assets, with only the Advertising Standards Authority looking at abusive practices in the industry. Those calling for a tougher stance want ministers to include crypto into the scope of the upcoming comprehensive gambling review, with MP Richard Holden warning: “It is the Wild West, this grey area between highly leveraged financial investments on the one hand and these products which could quite easily and sensibly be considered to be gambling.” The Financial Conduct Authority, which is currently only empowered to regulate crypto assets if there is a danger of their breaching money laundering or terror laws, is understood to be keen to gain additional powers to investigate the sector.

HEALTHCARE

Pressure grows on Triton to up Clinigen bid

Triton Investment Management, the private equity firm behind a £1.2bn bid for Clinigen, is reportedly under pressure to raise its offer for the drugs provider. Investors including Elliott Management, the hedge fund that is Clinigen’s largest shareholder, Sparta Capital, another activist fund, and Carlson Capital, which holds a position in Clinigen via derivatives, are thought to believe the offer undervalues the business.

LEISURE & HOSPITALITY

Pubs down by 15m pints

Pubs sold 15m fewer pints in the last two weeks of 2021, compared to the previous year, with the average venue losing £4,300 in beer and cider sales alone as drinkers stayed at home. 

MANUFACTURING

Manufacturers see decline in export demand

Data from the latest IHS Markit/CIPS sector snapshot shows Britain’s manufacturers have suffered a drop in export demand, with the pandemic and Brexit having an impact amid supply chain disruption and staff shortages. According to the survey of 650 manufacturers, inflows of new work from overseas dropped for the fourth month in a row in December. The IHS Markit/Cips analysis suggests that UK-based firms suffered from rising costs for freight, shipping and air transportation amid supply chain disruption. However, firms also recorded further growth of production, new orders and employment. Hiring was up for the 12th successive month in December, with firms looking to meet improved demand, tackle rising backlogs and address staff shortages. The IHS Markit/Cips manufacturing purchasing managers’ index was at 57.9 in December, with this compared to a three-month high of 58.1 in November on an index where a figure above 50 signifies growth. Dave Atkinson, a regional director at Lloyds Bank, said: “There are tentative signs as the pace of output growth builds that some supply chain pressures, which have dragged on the sector for months, are starting to ease.” However, he added that manufacturers “expect supply headaches to persist throughout 2022”.

MEDIA & ENTERTAINMENT

CMA urged to probe streaming apps

Independent music companies are calling on the Competition and Markets Authority (CMA) to investigate claims that streaming apps are leaving artists short-changed. The Independent Music Companies Association has asked the watchdog to broaden its investigation to digital service providers after launching a market study into the dominance of major record labels last year, telling the CMA an "all-you-can-eat" model offered by Spotify and Apple Music has caused the "real price of music" to fall. The group has also warned that efforts to overhaul how artists are paid have been ignored.

REAL ESTATE

First-time buyer numbers at highest level since 2006

The number of first-time buyers snapping up homes has reached the highest level since 2006, according to Yorkshire Building Society (YBS) analysis. The research shows that there were 408,379 mortgaged first-time buyers in 2021, with this up from 300,307 in 2020. This marks the first time in 15 years that the total has passed the 400,000 mark. The report notes that first-time buyers now make up half of mortgaged house purchases, up from just over a third in 2006. Nitesh Patel, a strategic economist at YBS, described the performance of the first-time buyer market as “extraordinary”, adding: “There are some strong drivers of demand that explain the increased volumes. Low borrowing costs is an important factor and the increased availability of more low-deposit mortgages has also been an enabler mostly for first-time buyers.”

ECONOMY

Spending and borrowing start to normalise

Figures from the Bank of England (BoE) show that credit card spending increased in November, with spending and borrowing showing signs of normalising after being distorted by pandemic-driven support measures. The report shows that £1.2bn was borrowed in November, with £900m going on credit cards. This was the highest total since July 2020 and lines up with pre-pandemic averages. The Bank also revealed that households collectively saved £4.5bn in November, with this below the six month average of £7.9bn.

OTHER

No surge in City workers returning to offices

The Guardian’s Joanna Partridge looks at the number of workers returning to the City yesterday, saying that while Tuesday would have normally marked the first day back in the workplace after the Christmas break for many office-based employees, staff at most large offices appeared to be continuing to work from home amid concern over the Omicron coronavirus variant. Data from Transport for London shows that the morning rush hour in London remained well below pre-pandemic levels, while figures from satnav maker TomTom show that morning rush hour congestion on roads in city centres including London, Birmingham, Manchester, Glasgow and Cardiff remained at half the levels seen in early January 2020.

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