BANKING
Hunt to resist raising bank levy
The Chancellor has reportedly taken a hike to the bank surcharge off the table for his Autumn Statement. The Financial Times reports that Jeremy Hunt will slash the bank surcharge from 8% to 3%, as originally planned by Rishi Sunak, when Corporation Tax increases to 25% next year. This will result in banks paying 28% tax on their profits, which is still higher than the current 27% they pay but an improvement on the 33% banks would have paid had the surcharge risen by 8%.
Open Banking boss Charlotte Crosswell appointed to chair CFIT
The Centre for Finance, Innovation and Technology (CFIT) has appointed industry grandee Charlotte Crosswell as its chair. Crosswell previously headed fintech industry body Innovate Finance and the Open Banking Implementation Entity (OBIE). Sarah Cardell, interim chief of the Competition and Markets Authority which has overseen open banking, said today that Ms Crosswell had “led important efforts to strengthen the management, governance and workplace culture” of the OBIE.
Popularity of tracker deals rises
Brokers report that borrowers are moving to tracker mortgages at the highest rate in more than a decade. Borrowers are betting recent interest rate rises will reverse next year and they will be able to lock in a fixed rate lower than today’s prices. The average two-year tracker rate is 4.10%, compared with a typical two-year fixed rate of 6.42% – equal to a £273 monthly saving on a £200,000 mortgage. Nathan Reilly, of Twenty7tec, said: “It seems [borrowers] are keen to see how the market settles and are therefore attracted by the additional flexibility a tracker could offer.”
Barclays cuts investment banking jobs
Following a drop in dealmaking activity this year, Barclays has decided to cut its workforce in corporate and investment banking by about 3%. The move comes two weeks after the bank reported a 45% slump in advisory fees from M&A in the third quarter.
PRIVATE EQUITY
Carlyle blames market volatility as fundraising slows to $6bn
Carlyle Group’s third quarter distributable earnings fell 12% year-on-year owing to a fall in income from asset sales primarily from its private equity division. Fundraising slowed from the $10bn it raised in the second quarter to $6bn. By comparison, Blackstone raised $45bn, Apollo Global Management raised $34bn and KKR raised $13bn. "The markets are more difficult so it is harder to sell in today's market but relative to what you're seeing elsewhere we have done very well with strong realizations," Carlyle CFO Curt Burser said. Carlyle's shares were down 6.4% on the news.
INTERNATIONAL
EU eases Basel III pressures
The European Union has delayed the implementation of the final leg of the globally agreed Basel III bank capital rules until 2025 in order to give banks more time to adapt to the rules. EU states also watered down proposals to toughen up requirements on branches of foreign banks in the bloc, easing pressure on them to open subsidiaries with the extra capital and EU supervision that brings.
German police raid UBS over Usmanov money laundering probe
The offices of the Swiss bank UBS in Frankfurt and Munich have been raided by German police in connection with a money laundering investigation into Uzbek-born Russian billionaire Alisher Usmanov. The suspected money laundering is in the scale of double digit million euros, a spokesman for the Frankfurt prosecutors' office said on Tuesday.
AUTOMOTIVE
Arrival shares plummet after warning it could run out of cash
British electrical-vehicle start-up Arrival warned on Tuesday that it might run out of cash in less than a year. “The company does not currently have cash on hand to fund operations for the coming 12 months, and that material uncertainties about going concern remain after consideration of these mitigating actions,” it said. The Nasdaq-listed company saw its shares tumble 35% to $0.38 by Tuesday late afternoon.
CONSTRUCTION
Persimmon cuts dividend as housing sales tumble
Shares in Persimmon fell 8% on Tuesday morning after the housebuilder announced that it was scrapping its dividend policy in response to “increased uncertainty” and higher taxes.
FINANCIAL SERVICES
Tens of thousands of people claim addresses used by fraudsters
Nearly 50,000 people have had their addresses listed as an organisation's main office without their permission over the past three years, Companies House has revealed. The disclosures came as MPs were warned that criminals can currently use other people’s personal information to register businesses with near impunity, because the corporate register does not verify the data submitted on applications. Nick Van Benschoten, of UK Finance, told MPs: “We see quite a lot of the driver of fraud in information that's been hacked, or people that have been scammed through online websites through spurious text messages. Companies House is definitely one of those enablers of fraud.”
Brookfield quits insurer’s board in dispute over Josh Harris’s venture
A spat has broken our between the American Equity Investment Life Holding company (AEL) and Brookfield Asset Management, which chided AEL for its investment in 26North Partners, a new asset management venture founded by Josh Harris, the co-founded Apollo Global Management. Sachin Shah, CEO of Brookfield, said he was stepping down from AEL’s board because of a “fundamental change in the strategic direction of the company” sending AEL’s shares down as much as 33% on Tuesday.
Binance plans to buy rival FTX in bailout
Cryptocurrency exchange FTX is being rescued by its rival Binance after it suffered a significant liquidity crunch. FTX suffered net outflows of $653m in a single day on Monday as investors moved their assets off the exchange. Binance CEO Changpeng Zhao said the company had signed a letter of intent to fully acquire non-US FTX operations but reserves the right to pull out of the deal at any time.
Coinbase censured by German watchdog BaFin
Germany's financial watchdog BaFin has censured crypto exchange Coinbase after an audit found “deficiencies” in how the group’s German unit was organised. BaFin’s reprimand comes after the company last week revealed that it swung to a $545m loss in the third quarter as a sharp downturn in crypto prices this year knocked its trading volumes.
Millennium to shake up investment operations
The co-chief investment officer at Millennium Management, Bobby Jain, is stepping back from his role as part of a shake-up of the hedge fund’s investment operations. Izzy Englander is establishing an office of the CIO, which will include two new co-CIOs and two heads of asset class risk management, according to a memo.
MEDIA & ENTERTAINMENT
Saudi Arabia bankrolls KKR-led bid for €15bn Vodafone towers business
A consortium led by private equity groups KKR and Global Infrastructure Partners and including Saudi Arabia’s Public Investment Fund is set to win the bid for a stake in Vodafone’s €14.8bn towers business, beating competition from Spain’s Cellnex. Vodafone holds 82% of Frankfurt-listed Vantage Towers, whose shares closed 2.5% higher on Tuesday, giving the company a market value of €14.8bn.
RETAIL
UK food price rises reach 14-year high in October
Food price inflation now stands at 14.7%, according to data insights business Kantar, a record high since the firm began tracking prices in this way in 2008. Soaring energy prices and labour costs have pushed prices up. Fraser McKevitt, head of retail and consumer insight at Kantar, said: “Yet again, we have a new record high figure for grocery price inflation and it's too early right now to call the top. Consumers face a £682 jump in their annual grocery bill if they continue to buy the same items and just over a quarter of all households now say they’re struggling financially, which is double the proportion we recorded last November.” Separately, the Independent reports that farmers are warning that soaring prices of animal feed and nitrogen fertiliser, as well as a shortage of labour linked to Brexit, are likely to push up prices even more over the next year. Minette Batters, president of the National Farmers Union said the conditions for farmers were the worst in living memory.
ECONOMY
Early retirement to blame for surging inflation - BoE
The Bank of England’s chief economist Huw Pill has warned that a surge in early retirement means more interest rate rises will be needed despite the threat of a severe recession. Addressing a conference hosted by UBS on Tuesday, Mr Pill insisted the Bank’s interest rate increases are not to blame for the recession. Rather, the economic malaise is caused by a sharp drop in the size of the UK’s workforce, which is driving pay up and fuelling inflation. However, he did concede that quantitative easing during the pandemic may have contributed to soaring price rises. Economists are now predicting a fall in GDP over the course of the next year will take years to reverse. Sanjay Raja, economist at Deutsche Bank, predicts GDP will fall by 0.5% over 2023 and will likely return to trend only after 2025.
OTHER
UBS chief risk officer quits to become professional photographer
The chief risk officer for UBS, Christian Bluhm, has resigned from the Swiss bank to become a full-time professional photographer. He will be replaced by Damian Vogel in May.