BANKING
Kwarteng pledges progress in smart data sharing
Business Secretary Kwasi Kwarteng assured the City at the Innovate Finance Global Summit this week that the Government was full square behind the roll out of open banking technology with a funding injection in the development of so-called ‘smart data’ in financial services in the works. “We’re setting up a Smart Data Council which will be brought together to build an ecosystem and really knock heads together to drive collaboration with industry across sectors, and to provide timely advice to government,” Kwarteng said. City Minister John Glen had praised the role of the technology in underpinning innovation in financial services earlier in the day. “We welcome the latest announcements … on taking open banking to the next phase through the establishment of the Joint Regulatory Oversight Committee, and the increased collaboration with industry including the funding and support for future smart data initiatives,” Charlotte Crosswell, Chair and Trustee, OBIE said. “As we move towards a new regulatory framework for open banking and smart data, it is vital to have a firm legal basis, providing certainty to industry and protection to end users.”
Barclays to start charging for replacement cards
Barclays has said it will soon charge to replace debit cards if more than one is lost or damaged in a year in the first such move from a high street bank. From August, the first replacement card will be free but any more will cost customers £5 if they misplace one or need to update their details. Barclays refuses to say how much cash it will save by the move but says it “will not charge if a customer is a victim of fraud or theft.”
INTERNATIONAL
HDFC acquisition of biggest shareholder could face regulatory hurdles
Analysts have said that HDFC Bank's $40bn acquisition of its biggest shareholder could face regulatory hurdles due to the stake it would give the bank in the insurance sector. The acquistion of HDFC Ltd by India's largest private lender will create an entity with a combined balance sheet worth $237bn and will include the target's insurance and other financial subsidiaries. HDFC Life and HDFC ERGO are among the leading life and general insurance companies in the private sector, and analysts say the RBI is unlikely to be comfortable with the size of the insurance operations the deal will give the bank. HDFC Bank's management said that they have asked the regulator for clarity on complying with its rules, but analysts believe it may not be easy to come by.
Deutsche Bank warns of recession in election year
Economists at Deutsche Bank have said Joe Biden’s America will enter recession towards late 2023 as a result of a predicting tightening of Fed policy. Matthew Luzzetti, US economist at the bank, said: “Inflation in the US is currently running at four-decade highs, and there are a number of reasons to believe it will remain well above the Fed's target unless demand is meaningfully dented.”
Russia moves closer to default as Washington blocks debt payments through US banks
The US has banned American banks from processing Russian payments on its dollar bonds in a move that will force Moscow to use up dollar reserves, new revenue, or default a US Treasury spokesperson said.
AUTOMOTIVE
New car sales fall to 24-year low
The UK's car industry saw its worst March for new car sales in 24 years last month as the global shortage of semiconductors continued to hamper factory output. Figures from the Society of Motor Manufacturers (SMMT) show just 243,479 new cars were registered last month, down 14.3% on March 2021. However, more electric cars were sold in March than the whole of 2019 with Tesla’s Model Y and Model 3 remaining the most popular vehicles. The industry considered the results extremely disappointing, particularly given that March is regarded as the busiest month as buyers are attracted by the new number plates. “March is typically the biggest month of the year for the new car market, so this performance is deeply disappointing, and lays bare the challenges ahead,” said SMMT's chief executive Mike Hawes. “While demand remains robust, this decline illustrates the severity of the global semiconductor shortage, as manufacturers strive to deliver the latest, lowest emission vehicles to eagerly awaiting customers.”
GM and Honda expand tie-up to develop millions of affordable electric vehicles
General Motors and Honda are to develop a series of affordable electric vehicles on a new joint platform. Reuters notes that the announcement “expands on plans for GM to begin building two electric SUVs for Honda starting in 2024 - the Honda Prologue and an Acura model”.
CONSTRUCTION
Crest Nicholson and Persimmon to sign up to building safety pledge
Crest Nicholson and Persimmon have confirmed that they will sign up to the Government’s building safety pledge. After months of talks, developers, led by the Home Builders Federation, are understood to have reached agreement with housing secretary Michael Gove over their contribution to fix the nation’s dangerous cladding. A formal announcement from the Government is expected later this week, but it is believed that housebuilders have agreed to pay to remediate cladding issues at tower blocks they have built that are more than 11m high.
FINANCIAL SERVICES
Russia turns to China for bank card microchips
Russia is reportedly turning to microchip manufacturers in China to circumvent western sanctions which have boosted demand for bank cards linked to the Mir payment system. Oleg Tishakov, a board member with the National Card Payment System (NSPK), said Russia is facing a shortage of microchips as Asian manufacturers suspend production amid a coronavirus pandemic and European suppliers have stopped cooperating with Moscow following sanctions. NSPK issued over 2m Mir cards between the end of 2021 and March, according to Reuters calculations based on the system's data, with total cards outstanding now at 116m.
Moneycorp plans complete withdrawal from retail business
City A.M. reports that Moneycorp plans to exit from its last remaining retail branches at Gatwick Airport. Since 2014, the fintech has been gradually exiting its retail operations, closing 77 branches including sites at Oxford Street, Heathrow Airport and Stansted Airport. In 2014, the retail business accounted for 57% of income, with 98% derived from domestic UK revenue streams. Today, Moneycorp's income is predominately derived from payments and banking services, with 84% B2B and 65% from international revenue streams, the company disclosed.
Schroders to oversee Centrica’s pension schemes
Centrica has appointed Schroders Solutions to oversee investments for its £10bn pension schemes. Acting as outsourced chief investment officer (OCIO), Schroders Solutions will help trustees develop each scheme’s investment strategy. The City firm will also build the overall portfolio for the energy services heavyweight, as well as oversee any third party managers.
MEDIA & ENTERTAINMENT
ITV readies bid for Channel 4
ITV is understood to have taken advice from its bankers Credit Suisse and Robey Warshaw in preparation for a bid for Channel 4. Its state-backed rival is to be privatised by 2024 with an estimated price tag of around £1bn.
REAL ESTATE
National Insurance rise could drag down house prices
Increased National Insurance contributions will make it harder for homeowners to borrow and potentially send house prices downwards, experts have warned. The rise will change how lenders run "mortgage affordability assessments", a leading banker has warned. The assessments look at take-home pay and test how much a worker can afford. The rising cost of living will also cut back what banks are willing to lend. Charles Roe, of the trade body UK Finance, said the tax rise would immediately hit borrowing power. He said: "The increased cost of living - including changes to National Insurance payments - will reduce a borrower's disposable income." Mortgage brokers and banks also sounded the alarm and warned sellers would have to cut asking prices when buyers were only given smaller loans. Rishi Sunak last year announced employees' National Insurance contributions would rise by 1.25 percentage points this month.
ECONOMY
Services sector continues to rebound
Services output rose to its highest level in ten months in March, according to the S&P Global/CIPS purchasing managers’ index (PMI) for the sector. The index rose for the third consecutive month to reach 62.6, up from 60.5 in February despite a slump in business confidence due to the conflict in Ukraine.
BoE expected to hike rates four more times this year
JP Morgan is forecasting four more rate hikes from the Bank of England this year with the bank rate expected to settle at 1.75% by the end of this year, the highest level since December 2008.