Market Intelligence

Sources are acknowledged.  

January 2019

 

Secure Trust halts new mortgage lending

Secure Trust Bank says it is looking to stop taking on new residential mortgages in the face of stiff competition and a cooling housing market in Britain. "During the second half of 2018 market pressures and competition intensified as evidenced by increasing loan to value metrics and lower new net lending margins," said the company, which plans to pause new originations until “conditions improve”.

Daily Mail

 

RBS seeks to buy back shares

RBS is considering buying back shares from the government as it looks to deploy more capital and speed up its privatisation. The bank has tabled a special resolution seeking permission to make off-market share purchases from the Treasury through a "directed buy-back". Shareholders in the lender will vote on the proposal next month. At least 75% of shareholders must approve the plan. It would then be up to the Treasury to decide if it wants to sell some of its 62.3% stake to RBS. Chairman Howard Davies said: “The board believes that this is in the best interests of the bank and its shareholders by helping to facilitate the return of the company to full private ownership.”

The Times

Credit card borrowing plunges to record low

The Bank of England’s latest credit conditions survey has found that high street banks are forecasting that borrowing on credit cards will decline in the first quarter of 2019 by the most since records began. The BoE said its measure of demand for credit card lending over the three months to the end of March had dropped to -20.7 from -7.2. The survey on credit card lending will help to calm concerns about excessive borrowing, but economists said there was a risk of too sharp a reverse. Howard Archer, chief economic adviser to the EY Item Club, commented: “While the Bank has been keen to see the rate of consumer borrowing slowing, it will not want to see unsecured lending dry up as it will weigh down on economic activity. The Bank ideally wants to see a more sedate rate of borrowing, which has seemingly been happening up until November.”

The Guardian

 

Specialist lenders see flat demand as industry faces three big challenges

Business volumes were flat for specialist lenders in the last quarter of 2018, according to the latest CBI/PwC financial services survey, as demand for financial services fell. Profits in the financial services sector as a whole remained flat for a third successive quarter, with investment managers and general insurers reporting declining profitability. Looking to this year, declines are expected to continue at a similar pace over the quarter to March, which is the first time that growth expectations have turned negative since 2009. Overall profitability is also expected to fall for the first time in over three years.

P2P Finance News

 

Two-thirds of accountants refer clients to non-bank lenders

Sixty-six per cent of accountants are referring their clients to external lenders, as alternative finance options such as peer-to-peer lending become more mainstream, according to a new survey commissioned by MarketInvoice. Banks are still the most popular lenders among accountants, but 36.3% would first recommend an invoice finance provider to clients seeking loans, while 33.66% would suggest a business loan provider. “This research reveals that accountants are stepping up and advising their clients about funding opportunities,” said Tom Davenport, head of strategic partnerships at MarketInvoice. Additionally, we have observed that forward-looking strategic accountancy practices also have in-house business finance specialists advising clients on funding options.

P2P Finance News

 

Demand for financial services falls

The quarterly financial services survey by the CBI and PwC reveals that the sector saw volumes shrink in the last quarter of 2018 for the first time in five years. And for the first time since December 2009 growth expectations have turned negative amid concerns about a no-deal Brexit which could cost financial services firms access to EU markets. The survey of 84 firms indicated that business was "flat or falling" for banks, building societies and specialist lenders, but holding up among insurers.

The Times

 

Surge in start-ups defies economic uncertainty

Figures due to be released this week will show the number of companies being formed in Britain bounced back last year and while London was still by far the most popular place to form a business, Birmingham, Manchester, Leeds and Bristol saw sharp increases in new ventures. The total number of new businesses started in Britain increased by 5.2% to 645,774 last year - an annual record and a return to growth following a decline in 2017. “These figures demonstrate the resilience and confidence of entrepreneurs,” said Matt Smith, the director of the Centre for Entrepreneurs. “The achievement is especially noteworthy as contractor accounting firms . . . seem to have been replaced by genuine local business activity.” However, although the UK was ranked third by the OECD for start-ups, it fell to thirteenth in the world for scale-ups in 2017. An early-stage investor, Malcolm Evans, says: “Scale-ups, which are what matter, requir e changing the shape of the commercial world around you by showing precision and human flair. It’s quality over quantity.”

The Sunday Times

 

 

Challenger banks struggle to smash glass ceiling

The FT says post-financial crisis reform of UK retail banking has been modest, with claims of a "glass ceiling" that challenger banks struggle to grow beyond.

Financial Times

 

Clampdown on EIS tax breaks felt by investors

A change in the rules for tax-efficient investment schemes – barring low-risk investments in favour of innovative, growth-pursuing businesses – led to a 17% fall in schemes open to investment in November 2018.

Financial Times

 

Maximum LTV most searched criteria

Maximum LTV featured in Knowledge Bank’s five most searched criteria for both bridging and commercial in December. Regulated bridging topped the most searched criteria in the bridging category, followed by maximum LTV for bridging, and development bridging – max LTV on acquisition, according to the platform’s criteria activity tracker. Nicola Firth, CEO at Knowledge Bank, said that the year ended largely as it had started with a huge number of searches across the different product areas. “During 2018, new lenders entered the market, but it was product innovation that really was the stand-out change,” she added.

Financial Reporter

 

Top clubs paid less than £90m in tax

Premier League football clubs have paid just £87m in tax between them over nearly a decade, according to new figures. Football finance expert Swiss Ramble found that in the period between 2008 and 2017, Arsenal paid £30m to HMRC, with Tottenham Hotspur handing over £24m and Manchester United paying £14m. The rest of the top tier sides paid less than £19m between them, with Liverpool, Manchester City and Chelsea not paying anything.

The Sun

 

Google shifts billions with Dutch sandwich

The Times reports that Google moved nearly €19.9bn to a subsidiary in Bermuda in 2017 as part of its “Dutch sandwich” tax avoidance manoeuvre. The amount of cash channelled to the Caribbean haven through a Dutch subsidiary increased by about €4bn that year, according to accounts filed in the Netherlands. This helped Google to pay a corporation tax rate of just over 6% on its foreign earnings, compared with the 35% headline rate in effect in the US at the time.

The Times

 

STB could end new mortgage lending

Secure Trust Bank (STB) has entered into consultation on a proposal to cease origination of new mortgage lending. STB said action is being taken in light of the current economic climate, increased competition and pressures on the housing market. The bank said its mortgage business will continue to operate as normal through the consultation period and there will be no impact on existing mortgage customers or new applications in progress.

FT Adviser Best Advice

 

Small firms hit by mortgage squeeze

Secure Trust Bank and Fleet Mortgages have said they will halt property lending, as competition has made it harder to turn a profit. A consultation has been launched at Secure Trust on whether to axe its entire range of mortgages for the general public, which is focused on the self-employed, older people and customers who have limited options. Meanwhile, Fleet Mortgages has withdrawn all its products while it seeks extra funding.

Daily Mail

 

Foreign investors at home in London offices

Investors have poured £20bn into central London offices this year - one third above the long-term average. More than 90% of the cash came from overseas investors, as the capital's commercial property market continued to defy fears of a capital exodus in the run-up to Brexit. Meanwhile, foreign buyers have invested £144.3bn in London's commercial property over the past 20 years, according to research by CBRE.

The Daily Telegraph

 

Watchdog freezes UK provider of mini-bond investments

The Financial Conduct Authority has banned London Capital and Finance from paying out interest pending an investigation into concerns about its marketing practices, which promised hefty returns.

Financial Times

 

Business lending declines over past year

New research from UK Finance has shown that lending to businesses over the past 12 months dropped by 1.7% and business deposits at banks grew by 1.6%, while the £11.3bn of credit card spending last month was 7.5% higher than November 2017. Separate data from UK Finance showed that that the number of mortgages approved by the major High Street banks has fallen amid fears of a stagnant housing market. A total of 80,127 loans were handed out in November - down 10.6% on a year earlier.

Daily Mail

 

More firms forced off Aim

Insolvency or financial distress forced sixteen companies off the Alternative Investment Market last year, analysis by UHY Hacker Young has revealed. The figure is up from nine in 2017. But despite the year-on-year increase, the number of businesses delisting after insolvency or financial distress was still lower than the average in recent years, with 24 failures recorded in each of 2016 and 2015 and 18 in 2014.

The Times

State borrowing dips

Data from the Office for National Statistics reveals that state borrowing fell to £7.2bn in November – a drop of £900m on a year earlier and marking the best November for 14 years. The figures also show that £26.5bn flowed out of Britain and into other countries in the third quarter, with the balance of payments deficit up from £20bn in Q2. Meanwhile, business investment has dipped for the third consecutive quarter, separate ONS figures show.

The Times

Employees at small firms will opt out of pensions

More employees at small firms are predicted to opt out of saving for their pensions once minimum deductions from their pay packets are increased this April. According to a survey by the Association of Consulting Actuaries, 65% of businesses employing fewer than ten people expect modest or substantial decreases in participation. Roughly 6.1m employees face a cut in their take-home pay when pension deductions under the automatic enrolment rules are increased, the Department for Work and Pensions estimates. Minimum employee contributions are due to be raised from 3% of eligible pay to 5% in April, while employer contributions are due to be raised from 2% to 3% at the same time.

The Times

 

FCA targets Bitcoin dealing

The Financial Conduct Authority is currently investigating 18 companies in connection with cryptocurrency transactions, the Telegraph reports. Figures released to the paper show nearly 70 probes have been launched in total. Christopher Woolard, the executive director of strategy and competition at the FCA said the regulator, the Treasury and the Bank of England would all be addressing the threat in the coming months and encouraging more "beneficial innovation".

The Sunday Telegraph

 

 

December 2018

 

Property market will stagnate

The Royal Institution of Chartered Surveyors (Rics) has said house prices will stagnate in 2019 and the number of sales will fall as Brexit and affordability constraints take their toll on the property market. Rics expects house sales to fall by 5% to about 1.15m compared with this year.

The Guardian

 

New rules introduced to protect scam victims

The FCA is introducing new rules to protect victims of bank scams. Under the changes, the bank receiving money from a victim of this type of scam, known as authorised push payment (APP) fraud, must take on the victim’s complaint if one is made about their handling of the situation. Currently, the bank sending the money - but not the receiving bank - must handle these complaints in line with FCA rules. The banking industry recorded almost 44,000 cases of APP fraud in 2017, with victims losing £236m. The average loss was almost £5,400.

The Times

 

Half of new mortgages close to risk limit, Bank warns

New figures from the Bank of England show record numbers of mortgage borrowers are taking on dangerously high levels of debt to get on the housing ladder. A record 47% of mortgages in the third quarter of 2018 went to customers on ‘high loan to income multiples’. For a couple, this means borrowing more than three times their annual income, and for a single buyer, borrowing four times their earnings. Justin Modray, of financial advice group Candid Money, said: “If we do see a spike in interest rates it could leave people struggling to afford their mortgages.”

Daily Mail

 

Financial system unprepared for another crash

David Lipton, the deputy head of the IMF, has warned that the financial system is unprepared for another downturn. He said that more than a decade on from the last crash in the global banking system, “crisis prevention is incomplete”.

The Observer

 

Investors flock to venture capital funds

Wealthy savers poured more money into tax-efficient venture capital schemes that invest in early-stage companies in 2017-18 than in any year since 2006.

Financial Times

 

London accelerates away from rest of the UK economy

ONS data shows London’s economy is moving farther away from the rest of the UK, growing more than four times as fast in 2017 than in the country’s poorest region.

Financial Times

 

Remortgaging hits decade high

October saw Britain's highest levels of remortgaging in ten years, according to UK Finance data, with 50,500 new homeowner remortgages worth a total of £9.2bn completed in the month, up 23.2% compared with the same month a year earlier. Noting that many fixed rate mortgages were coming to an end, UK Finance’s director of mortgages Jackie Bennett said the numbers were driven by homeowners locking into attractive deals amid a competitive market.

City AM

 

UK receives top marks in fight against money laundering

The Financial Action Taskforce, which sets global standards against financial crime, has awarded the UK top marks in eight out of 11 key goals in its latest report. However, the FAFT also warned that Britain’s national anti-money laundering unit is understaffed and underfunded. It said the lack of personnel and technological capabilities at the National Crime Agency’s financial intelligence unit was a serious concern.

Financial Times

 

More households in mortgage arrears

The Financial Conduct Authority has warned that more families are struggling to keep up with their mortgage payments now than at the height of the financial crash. In 2008 the number of homes in serious arrears of more than 12 months was 56,000, with a repossession rate per year of 22%, while 70,000 are now behind - although repossession rates have dropped to 2.7%. Jonathan Davidson, executive director of supervision, retail and authorisation at the FCA, said: "If interest rates start to go up, I’m afraid the repossessions will also rise." The FCA also warned that some banks are not doing enough to support those in arrears, with some failing to identify vulnerable customers. It also identified inconsistencies in firms’ arrears management practices. The regulator looked at eight banks, covering around 40% of the market, and is considering regulatory action against one or more of them.

Daily Mail

 

Financial services firms lead City office demand

Analysis by property services company JLL shows that financial services companies are looking for more new office space in the City than at any time since 2015. The sector is seeking 2.4m sq ft of office space, a figure that represents 37% of total demand and puts it ahead of any other sector. Figures show City of London office leases agreed by banks and financial services companies fell from 1.6m sq ft in 2016 to 1.3m sq ft in 2017, with take-up in 2018 set to marginally beat last year's total.

The Times

 

UK house price growth edges up

UK house prices rose by 1.9% in the year to November, up from a five-year low of 1.6% in October according to Nationwide. On a monthly basis, prices were up 0.3% to £214,044, but the lender said Brexit uncertainty has left the property market “relatively subdued”. Robert Gardner, Nationwide’s chief economist, said that in the near term the squeeze on household budgets and the uncertain economic outlook would dampen demand, despite low borrowing costs and unemployment being at a 40-year low. He did, however, add: “If the uncertainty lifts in the months ahead and employment continues to rise there is scope for activity to pick up through next year.”

BBC News

 

Italian banking crisis could spell doom for UK

The UK’s financial stability could be threatened by a fresh banking crisis in Italy, the Bank of England has warned, with risk modelling suggesting problems would move to French and German banks and then spread to the UK. Italian debt yields have risen amid political uncertainty while government debt is more than 130% of GDP. “Although direct UK banking exposures to Italy are low, if financial strains were to spread across the euro area, there could be a material risk to UK financial stability,” the Bank said.

The Daily Telegraph

 

Trust is up, but more authenticity is required from bankers

The Independent’s Chris Blackhurst says trust in bankers has improved, with 41% now saying they would trust a banker to tell the truth, up from 21% in 2013. Although advances have been made in making the sector safer from collapse, and behaviour seems to have changed; if they wish to climb higher in the trust table, Blackhurst says they “have to show humility and empathy, to be appreciated for the benefit they bring, to be seen to care. To get it.”

The Independent