UK launches scaled-back financial sector climate risk stress tests
The Bank of England has scaled back the scope of its inaugural stress test of the climate risks facing banks and insurers after participants expressed concern over the magnitude of the challenge. The Bank said the test - to be carried out every other year - is only "exploratory" for now and, unlike its regular annual stress tests, will not be used to prescribe how much cash banks need to set aside on their balance sheets. The test will look at gauging the size of risks to bank credit books and to the assets and liabilities of insurers. Andrew Bailey, governor of the Bank of England, said: “Today’s exercise will help us size the risks from climate change for both the largest banks and insurers as well as the financial system as a whole.” “The end result will be more robust management of climate-related financial risks across the sector,” he added.
Fintechs accuse big banks of trying to freeze them out of the market
Leaders of nearly twenty fintech companies have written to the Competition & Markets Authority (CMA) complaining that its consultation on the future of open banking reforms will put decision making in the hands of the large banks. The bosses raised concerns over the watchdog's plans to use proposals submitted by UK Finance as the basis for its consultation. It said: "Open banking's future can only be guaranteed if its governance is robustly separated from the banking participants the CMA order targeted. Positive consumer outcomes are at risk if competition is stifled: it has not been the banks that have introduced innovative offerings to the market."
Sunak wants G7 “carve out” for financial services
The UK is pushing to have the City of London exempt from the new global minimum corporation tax system approved by G7 finance ministers over the weekend. The FT explains that the rationale for excluding the financial sector was set out in October last year and is based on the premise that financial services were generally required to have appropriately capitalised entities in each jurisdiction and therefore paid the right level of local tax. The Chancellor Rishi Sunak reportedly raised the issue at the talks in London last week and plans to make his case again at the G20 summit in Italy next month. A British official said EU countries are taking the same position.
Paragon reports record earnings
Paragon Banking reported a 45% rise in underlying profits to an all-time high of £82.9m for the six months to March 31. The buy-to-let lender boasted a 45.1% rise in new lending, with a further £930m of buy-to-let loans in the pipeline, up 17.3% year on year.
The green revolution on the high street
The Mirror reports on the green retail products being offered by UK banks and other financial services firms. Green mortgages are being offered by several lenders. They target buyers of homes meeting certain environmental standards while mortgage discounts are being offered to selfbuilders and renovators to improve energy efficiency in the home.
Apax Digital to lead Tide’s first funding round since 2019
Apax Digital Fund is close to finalising an injection of tens of millions of pounds into digital business banking group Tide in a deal that is understood to value the company at around £350m. Tide has built a customer base of nearly 350,000 small and medium-sized enterprises, accounting for a UK SME banking market share of over 5.5%.
Intermediate Capital enjoys profit surge
Intermediate Capital saw its annual profit to more than half a billion pounds for the year to March 31 with group profit before tax standing at £507.7m, up from £110.8m in the previous year. The alternative asset manager posted a 19% jump in its annual third-party AUM to $56.2bn, sending shares up 127p to £22.83.
UBS sees success with hybrid digital wealth management platform
UBS has reported that its new hybrid digital wealth management platform has attracted $3.7bn in its first year. Chief executive Ralph Hamers commented: "[This] is a trend where we expect further growth and fast growth. That's where you can expect our resources to go."
Paris and Berlin lead fight to dilute Brussels’ stricter bank capital rules
An alliance of EU states led by France and Germany are fighting to water down Basel III rules that will introduce a new capital minimum arguing that the international standards threaten to penalise EU banks.
Europe's banks take on US payments 'oligopoly'
The FT reports on revived efforts to create a European payments system to rival Visa and Mastercard as EU banks increasingly fear being squeezed by US or Chinese operators, and missing out on the margin.
Renault charged with cheating emissions tests
Renault has been charged by French investigators with cheating on emissions and will have to pay a €20m (£17m) bail and provide a bank guarantee of an extra €60m to cover potential damages. The carmaker has disputed any wrongdoing and said it "has always complied with French and EU regulations".
Aviva told to return £5bn to shareholders
Cevian Capital is calling for Aviva to return £5bn in excess capital to shareholders next year. The Anglo-Swedish investment firm, which has built a 5% stake in the insurer, argues that Aviva should use the proceeds of a series of business sales which raised £7.5bn to fund the giveaway. Cevian’s co-founder Christer Gardell said the insurer had been "poorly managed for many years” but “has the potential to become a focused and well-capitalised market leader.” Along with the dividend payment, Cevian wants Aviva boss Amanda Blanc to lift her cost-saving target from £300m to £500m yearly and more than double the dividend to 45p within three years.
Fund managers ‘must say if they have skin in the game’
Interactive Investor wants individual fund managers to be obliged to disclose how much of their own money they invest in the funds they run and market to retail investors. The investment platform has launched a campaign for more transparency after nine out of ten of its own users said that they would like to see evidence that fund managers had “skin in the game”. Richard Wilson, Chief Executive of Interactive, has written to the Financial Conduct Authority, calling for more disclosure. “Retail investors deserve better disclosure and treatment — it is just good governance,” he said.
Debate over US drug costs reignited after Biogen Alzheimer's treatment approval
Biogen’s decision to charge $56,000-a-year for its newly approved Alzheimer’s treatment has been criticised, with Michael Carome, director of the health research group at Public Citizen, remarking: “these costs to patients, to their families, are just not justified based upon what we know about this drug.” Reshma Ramachandra, co-chair of the Drug Affordability Action Committee at Doctors for America, added: “In approving aducanumab, the FDA has made every physician’s nightmare come true of forcing patients to shoulder the burden of paying an exorbitant price for a drug with no proven benefit."
LEISURE & HOSPITALITY
Staycation boom good for the economy
The south west of England is set to be one of the main beneficiaries of UK holidaymakers deciding to forego a foreign holiday this year as Covid disrupts international travel. Kate Nicholls, chief executive of UK Hospitality, says: “If people are replacing a summer by the sea in Spain or Greece, they tend to think of a coastal location in the UK, and they want better weather so go to the south west.” Meanwhile, economists say the lack of international travel could boost GDP, with Martin Beck at Oxford Economics citing it as one reason he upgraded his growth forecasts recently.
Delay to easing restrictions devastating to pubs
Pub groups have warned that if the government delays the current road map out of lockdown restrictions confidence in the sector will be further sapped. Patrick Dardis, chief executive of pub giant Young’s, said there is “no reason” for such delays while Greene King’s chief executive Nick Mackenzie added that figures show that “the entire sector is in a precarious position”, with smaller businesses facing a particularly hard impact.
Lloyd Webber to open theatres come what may
Andrew Lloyd Webber has warned he may have to sell his West End venues if Covid restrictions are not eased as planned. The composer has vowed to open his theatres on 21 June, and is prepared to be arrested if authorities try to intervene.
MEDIA & ENTERTAINMENT
Google fined €220m over advertising practices
The French Competition Authority has fined Google €220m over its abuse of power in online advertising. The regulator said Google has been unfairly sending business to its advertising server and its online advertising auction house, at an unfair advantage to its rivals. As part of the settlement, Google has promised to improve the interoperability of its Google Ad Manager services for third parties.
Haldane: UK housing market is “on fire”
The Bank of England’s chief economist Andy Haldane has said the UK’s housing market is “on fire” with the rise in prices likely to worsen pre-existing wealth inequalities. His comments come after figures from the Halifax revealed the average house price went up £3,000 in May, taking the average property price to a record high of £261,743. In the 12 months to May, the average house price has increased by £22,000. The price spike has been driven by the Government’s stamp duty holiday, reduced supply combined with increased demand from households with more savings after the lockdowns, Haldane said.
Furlough must end before it stymies recovery
The Telegraph’s Matthew Lynn says the furlough scheme should be ended this week as employers are crying out for workers while the Government piles more debt on the country to pay people to stay at home. The latest figures show 10% of the total workforce is still on furlough but many of these people work in sectors that have opened up, Lynn says, adding that the scheme has “long since outlived its usefulness – and right now it is actively holding back the robust economic recovery we need.”
World Bank expects fastest global growth since 1973
The World Bank is upgrading the outlook for the world economy predicting global growth of 5.6% this year, up from the 4.1% it forecast in January. The projected expansion would make 2021 the fastest year of growth since 1973.