NatWest boss: Don’t talk Britain into crisis
NatWest chairman Sir Howard Davies has said the UK should not talk itself into a "worse economic situation" than it is already facing, declaring that consumer spending and the mortgage market in the UK was still "robust" despite warnings over surging inflation and spiralling bills. "We have seen at the bank that consumer spending has been fairly robust. People's deposits have actually still gone up in the first half of this year, “he told BBC Radio 4's Today Programme. "We aren't seeing significant distress in the mortgage market. I think it is important not to talk ourselves into a worse situation than we are actually in.”
Kwarteng summons bank chiefs for economy crisis talks
Immediately after being appointed, the UK’s new Chancellor has convened a meeting with the bosses of Britain’s biggest banks, reportedly to set out the Government's approach to the economy. The country’s largest lenders have been told by the City regulator to outline how they plan to support their customers through the cost-of-living crisis, and Kwasi Kwarteng is likely to impress upon them the importance of doing so, according to one insider.
Tech-focused private equity giant to open London office
Chicago-based private equity house Thoma Bravo has chosen London as its first base outside the United States. Sources close to the company said founder Orlando Bravo is keen to spend more time in London and believes the market is ripe for takeovers.
Narrowing margins on the horizon for China's top banks
Bankers and analysts have said that top tier Chinese banks preparing to respond to Beijing's call to boost lending to the real economy and debt-laden property sector are set to face a squeeze on their profit margins in the second half. Modest gains in profits in the second quarter were posted by five of China's biggest state-owned banks. However, four of the banks, except for Bank of China, reported falling net interest margins. Analysts said that lower asset yields as a result of reduced benchmark interest rates and continuing competition for deposits, a key source of funding for Chinese banks, means interest margins of banks will see greater pressure.
Qatar tells banks not to exchange currency with outside entities
Reuters reports that the Qatar Central Bank (QCB) has told banks in the Gulf state not to exchange its currency with entities outside the country without prior permission. The Qatari riyal, officially fixed at 3.64 to the dollar since 2001, has in the offshore market been quoted below its peg for the most part since mid-2017 when four Arab states boycotted Doha in a political row, which was resolved in early 2021. In the communication sent to treasury directors at local banks on Monday, the Qatar Central Bank (QCB) instructed banks not to engage in any swap deals to obtain riyals or dollars with any entity outside Qatar, according to reports.
South Korea regulator warns local banks over FX liquidity
South Korea's financial regulator has advised the country's local banks to manage foreign-exchange liquidity positions in a more conservative manner than before given the possibility of a prolonged period of dollar strength. The Financial Supervisory Service said that the while the overall foreign exchange liquidity position appears to be stable despite the won's sharp decline against the dollar, deputy governor Kim Young-ju of the agency recommended banks manage liquidity in a "more conservative" manner.
VTB returns to profit
Russia's second biggest bank VTB has announced it returned to profit in July following record losses in the first six months of the year, and will start lending in the Chinese yuan and other non-Western currencies later this year. Russia's banking sector posted heavy losses in the first six months due to unprecedented economic sanctions from the West and officials have pushed lenders to drastically reduce their exposure to the US dollar and euro.
Credit Suisse sells trust business
Credit Suisse Group is selling its global trust business as the bank continues with its de-risking programme. Credit Suisse will sell the bulk of its trust business in Guernsey, Singapore and the Bahamas to the Bank of N.T. Butterfield & Son Limited, while Gasser Partner Trust will take over the Liechtenstein business.
Citi close to €100m deal for Dublin site
Citigroup is finalising a deal to buy a new office site in the heart of Dublin as the US bank plans for strong organic growth in its Irish business.
Construction activity declines in August
Construction activity in the UK decreased for the second month in a row in August. According to S&P Global, PMIs for the construction industry, which makes up less than 10 per cent of the UK economy, hit 49.2 in August, slightly up from a flash estimate of 48.9. Any number below 50 points to contraction in private sector activity. “Alongside inflationary pressures, concerns around the potential for a wider economic downturn also impacted the sector,” the PMI survey said. Overall inflation rates fell back slightly despite rising energy costs, reflecting recent easing in supply chain pressures.
Berkeley Group back "on track" to meet profit guidance
Berkeley Group has said it is back "on track" to meet its profit guidance in the year ending next April as it said it expected most of the profit will fall in the second half of the year. The London-focused housebuilder said it would deliver between £600m and £625m in pre-tax profit over the year to April 30 2024. This would be a siginificant increase from the £551.5m that the company delivered in the previous 12 months. Berkeley said around 55% of its profit will come in the second half of the year because of the way its production is scheduled. The business is also facing increased costs, which are rising between 5% and 10% across its portfolio.
Coherent reforms needed to keep UK financial services competitive
Writing in City AM, Constantin Cotzias, the European director at Bloomberg, says the UK and the EU must reach a constructive, workable and cooperative financial services framework as the current fractious relationship undermines the UK’s competitiveness. A clear direction for corporate governance and a simplified tax system should be imperative to this framework, he says.
Home insurer Hippo defends start-up sector despite mounting losses
Hippo CEO Richard McCathron has criticised sceptics of the home insurer and the sector’s fellow start-ups, saying they have “buried their heads in the sand” after a market sell-off fed doubts over the future of the companies.
Scotland to freeze rents to shield tenants from rising living costs
Nicola Sturgeon, Scotland’s first minister, on Tuesday announced a freeze on rents in the social and private sectors and a moratorium on evictions to shield people from the cost of living crisis.
Boots plans online marketplace for beauty products
Boots is setting up a new online marketplace for health and beauty products as the pharmacy chain tries to strengthen its ecommerce offering. The retailer will stock third-party brands online from next spring.
Truss’s energy rescue plan could spike inflation rise
Analysts have said Liz Truss’s plan to borrow heavily to fund an energy price freeze could tamp Bank of England plans to increase interest rates. Elizabeth Martins, senior economist at HSBC, branded the policy a “near-term game changer” adding that freezing the energy price cap at current levels “would potentially reduce inflation expectations and the likelihood of a wage-price spiral – the two key reasons why the BoE chose to get ‘forceful’ in August.” Neil Shearing, group chief economist at Capital Economics, also said Truss’s plan would lead to inflation peaking at 11% next month, rather than 14.5% in January as currently forecast.
Sterling rises from two-year low on energy plan
The pound climbed by much as 0.7% to $1.16 on Tuesday morning after sliding to its lowest since March 2020 overnight. The boost was driven by reports of Liz Truss's planned energy bills freeze. But sustaining the bounce will depend on “the Government's credibility in costing the plan and avoiding a further larger blowout in the fiscal deficit,” says David Forrester at Credit Agricole.