Early-stage deals drop despite rise in investment
James Cook in the Telegraph looks at how, despite an increase in venture funding in general in the UK, early stage start-ups are struggling to attract financing between £25,000 and £500,000. Explanations seem to be that angel investors have much of their capital tied up and are waiting to exit current investments before ploughing the proceeds back into the market. The other is that start-ups are still raising seed funding but simply aren’t talking about it anymore. Elsewhere, the FT reports that despite a record £12bn equity funding for UK-based start-ups in 2019, the amount secured by university spinouts declined with experts fearing large investors are letting high-potential firms slip away to foreign buyers.
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New £1bn fund for Northern Powerhouse development
A new £1bn fund has been set up for property developers in Yorkshire and the North. GBB will offer secured property development loans of between £1m and £5m, with 90% of lending supporting regional property developers and SME construction companies. The bank will support residential property development projects of around 10 to 40 houses and commercial properties of between 1-3,000 square metres, across the Northern Powerhouse regions. It estimates that this will support over 12,400 new residential properties and over 500 commercial properties.
New venture hopes to bridge skills divide
Neil Bradbrook, managing director of Ahead Business Consulting, has launched a new Business Club venture designed to help small businesses close the skills gap. Bradbrook said: “This is not another networking group – this is practical face-to-face training. Small business owners tell us they have never benefited from formal business training, so whilst they have a passion or area of expertise that they have gone into business with, their business knowledge and acumen is often less. I believe this skills gap is the reason most small businesses fail, so we wanted to fix that.”
Manufacturer criticised over late payment practices
The interim small business commissioner, Philip King, has accused the British division of the manufacturer Bombardier of exploiting its suppliers by failing to settle invoices on time. The Federation of Small Businesses described the company’s behaviour as “shocking”. Mike Cherry, the federation’s national chairman, said: “Bombardier must change course, and other big businesses using their dominant position to bully small suppliers must realise they are on borrowed time. Nobody deserves to be treated like this.” Bombardier agreed to review its payment practices.
BAE and Shell sanctioned for late payment
BAE Systems and Shell have been removed from the prompt payment code – a government-backed scheme that promotes fair treatment of suppliers – after having failed to honour a promise to pay 95% of invoices within 60 days. in the hope of being reinstated, BAE has submitted a plan for improving its treatment of suppliers to the Chartered Institute of Credit Management, which runs the scheme. Mike Cherry, national chairman of the Federation of Small Businesses, said: “Suspending BAE and Shell from the industry code is an important statement. Taking decisive and public action against those businesses that are found to be bullying suppliers or consistently paying late is the only way we can affect the cultural change needed.”
DAG seeks £15m for SME lending
DAG Global has applied for a UK banking licence and launched a £15m funding round. The merchant bank will take deposits from fintech, blockchain and crypto firms and lend those funds to digital SMEs.
The Daily Telegraph
Financial services ‘punch-up’ unhelpful, says incoming BoE governor
Andrew Bailey, incoming governor of the Bank of England, has warned that both sides of the Brexit negotiating table must find a way to settle disagreements over how the UK’s finance industry can do business with the bloc in a constructive way. Appearing before a House of Lords committee, Bailey, who said it would be “hard to imagine” the UK not being granted equivalence by the EU after the post-Brexit transition period ends in December, asserted: “You would want to have a mechanism to say OK, let’s sit down and talk about what we’re doing here. If that ended up in a sort of metaphorical punch-up every time and a threat to withdraw equivalence, that process would just not work properly.” During the same session, deputy governor Sam Woods said he was “cautiously optimistic” the EU would grant permission for the City’s clearing houses to continue processing derivatives for EU customers after Brexit.
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Brussels warned over access to City
The EU will not entertain the UK’s pitch for “comprehensive permanent equivalence decisions” for financial services in any free trade arrangement, Michel Barnier has said in response to Sajid Javid’s assertions that the government would seek to keep regulatory autonomy while a “durable relationship” can be built. Bank of England deputy governor Sir Jon Cunliffe warned the EU that it will need to maintain close financial ties with London if it wants to remain part of “global pools of capital and liquidity” after Brexit. Mark Carney joined Sir Jon in hinting that access for EU institutions to London could be cancelled if the EU threatened to pull UK eligibility and that handing regulatory control of the City to Brussels was untenable.
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UK should back the trawlermen over the financiers
The Telegraph’s Matthew Lynn outlines why the UK should back its fishermen over financiers in negotiations with the EU. He says the City’s access to EU markets isn’t as vital as is sometimes made out and with London a global financial centre, tying it to European regulations would do it more harm than good. Fishing, on the other hand, although worth a fraction of financial services, could grow considerably if the UK had full control over its waters and a revived industry would benefit a raft of deprived areas.
The Daily Telegraph
Pension savings risk being discredited by relief changes
Simon Harrington, of Pimfa, a trade body for financial advisers, tells the Telegraph that cuts to pension tax relief for higher earners could drive savers to Isas, a move that would be favoured by the government as Isas are liable for IHT on death while pensions are not. The paper also points out that if the relief was cut as has been mooted, savers would lose out by paying income tax at their highest marginal rate on withdrawals after having lost the highest rate of tax relief on the way in. Steven Cameron, of pension provider Aegon, warned the changes could see people dramatically change behaviour and perhaps cease to use pensions at all.
The Daily Telegraph
Crowdcube sales up despite Brexit uncertainty
Sales at Crowdcube rose 36% last year after a record number of businesses opted to use its services to raise funding. UK’s largest crowdfunding platform’s revenue passed the £8m milestone or the first time to reach £8.2m but failed to reach an earlier-stated target of £10m in sales for the year. Luke Lang, Crowdcube’s chief marketing officer, said he believed the growth figures were “really, really strong, particularly when you look at the economic climate in the last 12 months and all the Brexit uncertainty that we’ve been contending with”.
EU increased cartel fines 74% last year
New analysis has revealed that the EU increased fines for cartels by 74% last year to $1.6bn (£1.2bn). In May, the EU Commission hit five banks, Barclays, RBS, Citigroup, JPMorgan and MUFG, with a cumulative €1.07bn (£900m) fine for operating two cartels in the foreign exchange markets. There are two further cases involving secondary market trading in US and European government bonds which are being looked at by the Commission and may result in more large penalties. Philip Mansfield, a partner at Allen & Overy which carried out the analysis, said: “Fine levels vary from year to year for a range of reasons. What doesn’t change is regulators’ commitment to robust cartel enforcement.”
Financial services key as UK reasserts itself on world stage
Writing in City AM, William Russell, the lord mayor of London, calls on the government to prioritise the financial services sector as talks with the EU and other countries get under way. He talks about potential partnerships with Gulf states on green finance and the opportunity to work with old friends and new on the world stage “in a way that ensures the UK’s financial services sector can continue its global success story for decades to come.”
PPI complaints break 2m barrier
The Financial Ombudsman Service received over 151,000 PPI inquiries in the last six months of 2019, taking the total complaints lodged to over 2m. Some £36bn has been paid out so far and the total bill may be up to £50bn.
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Payments groups join forces to survive
The FT reports on consolidation in the payments services industry, noting fears in the sector that the likes of Amazon, Google and Apple could skirt current global payment systems entirely.
Barclays results boosted by investment bank
Shares in Barclays were down more than 3% in early trading on Thursday as the bank reported that pre-tax profits for the year jumped 25% to £4.4bn. Pre-tax profits came in at £6.2bn after stripping out £1.4bn of conduct charges and litigation costs and a key target of delivering a 9% return on equity was also hit but the target of a 10% return on equity for 2020 was revised to say instead that it would be “achieved over time”. A strong performance from the investment banking division drove the rise in profits.
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Banks must do more to promote no-frills accounts, says FCA
The Financial Conduct Authority (FCA) has said high street lenders are not doing enough to promote basic bank accounts to customers with poor credit history or debt problems. The regulator wants banks to review their sales processes. Rachel Springall, of finance data firm Moneyfacts, said: “I think it is important that the basic bank account is presented as number one for anyone who contacts a bank.”
The Daily Telegraph
N26 is pulling out of Britain
German-based digital lender N26 is closing hundreds of thousands of bank accounts and leaving Britain arguing that it would need a UK banking licence after the Brexit transition period ends and it is too expensive to get one. However, rivals say there is no regulatory reason to leave the UK and N26 simply hasn’t prepared and wanted to focus on less competitive markets. UK customers have been asked to switch to another provider by April 15th. N26 will focus on expansion elsewhere, including in the United States, said N26’s chief banking officer Thomas Grosse.
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Starling Bank raises £60m
Challenger bank Starling is to award shares to all of its 800 employees after raising £60m to boost its expansion plans. The new finance, led by existing investors Merian Global Investors and JTC, brings the total raised by Starling to £323m and follows two funding rounds of £105m last year. The move echoes similar fundraising efforts within the community – Monzo and Monese have both been linked with new funding rounds in the first half of this year, while Revolut has already completed a bumper funding round set to value the rival challenger bank at $5bn (£3.85bn).
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Barclays bends to demands on fossil fuels
Following rising threats of an investor revolt Barclays is to draw up stricter rules on financing the oil industry. The bank has promised to engage with shareholders seeking to force it to stop financing projects that are not aligned with the Paris climate agreement. Separately, Barclays is set to close 20 branches over a 13-week period after it announces annual profits of £6bn on Thursday. The rise in profits from £5.7bn the previous year has been driven by an uptick in the investment bank’s performance. Meanwhile, campaigners against deforestation have said HSBC had failed to cut funding to companies engaged in the destruction of rain forests despite a pledge in 2017 to sever ties with unethical palm oil producers.
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Nationwide cuts rates for ‘green’ loans
Nationwide is earmarking £1bn for cut-rate ‘green’ mortgages and loans for eco home improvements. Homeowners will be offered loans of up to £25,000 to upgrade their existing houses and flats, and buyers who opt for a new-build with a grade A energy performance certificate can apply for a special preferential rate ‘green’ mortgage, with interest charges about half a percentage point cheaper than Nationwide’s usual charges. It is the first big mortgage lender in Britain to offer cheaper deals for customers who go green.
RBS rivals fall short in bailout switch scheme
Royal Bank of Scotland’s rivals have only managed to lure 23,000 business customers away from the bank, which is required to offload at least 120,000 as a condition of its government bailout.
Digital banks have poor service record
The Times reports on the increasing number of complaints sent to the paper about digital banks with criticisms over poor communication and difficulties accessing funds. The Financial Ombudsman Service had considered 190 complaints about Revolut and 140 about Monzo as of September last year, the paper notes.
Job fears sends morale at HSBC down
An internal survey completed by 100,000 HSBC staff globally has found morale has plunged since CEO John Flint was ousted and the bank said it was preparing to cut 10,000 jobs. Interim boss Noel Quinn is due to unveil HSBC’s new strategy shortly.
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Virgin’s new savings account for the hard up
Virgin Money is to launch a new bank account for people with poor credit histories in the spring with credit cards expected to include a new feature allowing customers to pay for large purchases in instalments.
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