Mortgage deals pulled by banks
New figures from Moneyfacts show that the number of mortgage deals borrowers can choose from plummeted from 5,356 at the beginning of February to 4,838 this week. This was the largest drop since May 2020 – when banks were preparing for economic mayhem and house sales had come to a halt due to the pandemic. Fewer deals has forced up the average rate charged on "variable" mortgages by 0.15 percentage points in the past month – the largest single increase ever recorded by Moneyfacts. Hopeful homebuyers now only have four weeks to secure a deal before a lender replaces it with a higher charge, the data showed. In February a borrower could mull their options for six weeks on average.
BoE to hike rates to tame inflation
The Bank of England is set to send rates to the highest level since just after the financial crisis in a bid to tame runaway inflation triggered by the Russia-Ukraine conflict. According to Bank of America, the BoE will focus on eradicating an average inflation rate of 7% this year by hiking rates at each of its next five meetings, taking borrowing costs to 1.75% by November. Poor wage growth coupled with elevated inflation will erode real incomes at the worst rate since at least 1955, Bank of America said, adding that household consumption, which accounts for around 60% of UK output, will stagnate for the next 18 months.
MPs call for new probe into rate rigging
MPs have called for a fresh inquiry into the interest rate-rigging scandal which led to two bankers who blew the whistle at Barclays being jailed. It comes after the BBC uncovered audio tapes that suggest the Bank of England and top government officials pressured Barclays to rig interest rates. The audio recordings and documents were never seen by a previous parliamentary inquiry into the scandal in 2012.
Woods: Russia sanctions 'manageable' for UK finance
Bank of England Deputy Governor Sam Woods said on Tuesday that Britain's insurers and wider financial sector will be able to absorb the effect of sanctions on Russia. "We looked very carefully at whether we think these are manageable in terms of any collateral damage or impact on the UK financial services sector, and so far we are comfortable that they are," Woods said.
Bank fraud victims miss out on reimbursements
An investigation by consumer group Which? has found banks are returning less than half the amount of cash stolen from victims of transfer fraud. Which?'s analysis of UKFinance figures found that between July 2019 and the end of June 2021 a total of £854m was lost across 306,573 cases of authorised push payment fraud. But £495m was not reimbursed, Which? said.
Blackstone doubles London workforce
Blackstone's chief operating officer Farhad Karim has said that the asset manager nearly doubled its London workforce during the pandemic. Mr Karim said the now 500-strong team has been built by wooing dealmakers from investment banking rivals. “We are at an inflection point of tremendous growth in the business,” Mr Karim said, adding that the investment group is also looking to expand in Paris and Frankfurt. “Obviously, a lot of that talent we are looking for is coming from the investment banking world,” Karim added. “It’s not just a pay differential that is attracting bankers to the firm though. Pay is important but it’s a combination of factors.”
EU to ban Belarusian banks from Swift
The European Commission has prepared a new package of sanctions against Russia and Belarus over the invasion of Ukraine. The package will ban three Belarusian banks from the Swift banking system and add several more oligarchs and Russian officials to the EU blacklist. Meanwhile, Russia's central bank on Tuesday announced that citizens with foreign currency accounts would not be allowed to withdraw more than $10,000 until September 9th and ordered banks not sell hard currency. Separately, the FT reports on how crucial Sberbank and VTB are to the Russian economy and how sanctions will make it difficult for Russian corporates to raise credit. In Ukraine, the country’s deputy central bank governor Oleksiy Shaban has said bank branches will stay open in the country and keep their ATMs stocked with cash where there is no direct risk to life from fighting between Russian and Ukrainian forces. Cash withdrawals are capped at 100,000 hryvnias ($3,367) per day and people leaving Ukraine should make sure not to take local currency with them, he said. Finally, UniCredit has said a full write-off of its Russian business, including cross-border exposure, would cost around €7.4bn ($8.1b).
Citi plans 900 hires for commercial banking unit
Citigroup’s commercial banking unit will hire 900 staff over the next three years as it looks to ramp up its presence in high-growth and emerging markets.
Treasury urges fund managers to pressure companies to sever ties with Russia
Last Friday, the Chancellor Rishi Sunak met with executives from Legal & General, Aviva, M&G, Phoenix and Fidelity to ask them to persuade the companies they invest in to pull out of Russia. The meeting, also attended by John Glen, the City minister, and Nikhil Rathi, the chief executive of the FCA, illustrates the importance ministers place on using City investors to help isolate the Russian economy following Vladimir Putin’s invasion of Ukraine. But some investors voiced concern that ditching their Russian holdings could provide an opportunity for Mr Putin and his associates to buy back the assets at rock bottom valuations.
M&G reports net inflow as turnround begins to bear fruit
M&G has unveiled a £500m share buyback programme after it exceeded capital generation targets set out following its demerger from Prudential in 2019. Bosses at M&G said the firm had hit a number of demerger commitments and topped capital generation of £2.8bn over two years, easing past the original target of £2.2bn by the end of 2020.
UK insurance reform hits new customers with price rises
Insurers have reported that reforms designed to protect loyal customers are having the predicted effect with those who shop around paying more and the number of switchers coming down.
LEISURE & HOSPITALITY
Fast food giants shutter businesses in Russia
PepsiCo, Coca-Cola, McDonald's and Starbucks have bowed to boycott threats and pledged to temporarily close their businesses in Russia in the wake of Vladimir Putin’s attack on Ukraine. The move will put more pressure on KFC and Burger King to act as they weather criticism for staying largely silent about the war.
Rolls-Royce nets £500m investment in SMR tech
Rolls-Royce has secured a £500m cash injection to help build its small modular reactors, also called SMRs, which can power half a million homes with clean energy. The investment comes from Qatar, the owners of French oil giant Perenco, US company Exelon Generation and £210m in UK Government funding. Trade body the Nuclear Industry Association said: “This is a vital step forward for British nuclear technology. The UK needs the Rolls-Royce SMR to strengthen our energy security and cut our dependence on gas as we move toward net zero.”
Value of mortgage advances tops £70bn
The latest mortgage lenders' statistics suggest the housing market is cooling down, according to property experts. In figures published by the Bank of England, the outstanding value of all residential mortgage loans was £1,613.4bn at the end of Q4, 2021 – up 4.7% on the same period the year before. The value of gross mortgage advances in this period was £70.2bn, 8.4% lower than in the fourth quarter of 2020. It was also the lowest level since the third quarter of 2020. The value of new mortgage commitments was 2% lower than in the third quarter and 11.9% less than a year earlier. The share for house purchase for owner occupation was also down 10.9 percentage points from the fourth quarter of 2020. Gareth Lewis, commercial director of property lender MT Finance, said a cooling of the market was “not surprising given the frenetic pace of activity over the previous 18 months.” The mania seen in previous months was “not sustainable” and “with double-digit house-price growth pricing first-time buyers even further out of the market, a more reasonable pace, similar to pre-pandemic levels, is welcome,” Lewis added.
City keeps exemption from office conversion planning rules
Housing Secretary Michael Gove has confirmed that he will not challenge the City of London Corporation's request for an extension of an exemption from planning rules that encourage offices to be converted into housing. Mayor of London Sadiq Khan welcomed the decision, which he said would safeguard the future of central London. A spokesperson for the City of London Corporation said that as a result, it would be "able to continue to manage the stock of offices in the Square Mile and to protect existing office floor space against a change of use to housing where that would cause harm to the primary business function of the City".
Britons face catastrophic hit to living standards
The Centre for Economics and Business Research predicts UK economic growth will halve this year to 1.9% and fall to zero in 2023. The consultancy expects inflation to stay above 7% until the beginning of next year and go as high as 8.7%in the spring. Soaring inflation combined with steep tax hikes leads the CEBR to estimate living standards in the UK will drop at the worst rate since records began in the mid-1950s – by an estimated £71bn – which amounts to £2,553 per household. The CEBR said the projections will put the Chancellor under more pressure “to put the economy on a semi wartime setting on 23 March”. Separately, the Bank of England is set to send rates to the highest level since just after the financial crisis in a bid to tame runaway inflation triggered by the Russia-Ukraine conflict. According to Bank of America, the BoE will focus on eradicating an average inflation rate of 7% this year by hiking rates at each of its next five meetings, taking borrowing costs to 1.75% by November. Poor wage growth coupled with elevated inflation will erode real incomes at the worst rate since at least 1955, Bank of America said, adding that household consumption, which accounts for around 60% of UK output, will stagnate for the next 18 months.