Now three-year bond savers get a 50pc rate cut

Charterbridge

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Now three-year bond savers get a 50pc rate cut

Now three-year bond savers get a 50pc rate cut
This month savers could see their income more than halve when fixed-rate bonds come to the end of their term. Among the worst hit are those who went for a three-year fixed rate in early 2010. Then, the base rate had fallen, but rates on High Street accounts were still relatively high. Their hopes that interest rates would have risen by now have been severely dashed. They enjoyed interest of as much as 3.6pc after tax (4.5pc before) over the past three years with Halifax, Britannia, Cheshire and Derbyshire building societies.
Daily Mail, p. 44

We will have to save far more as investment returns dwindle
If you have savings, which asset class you choose to allocate your wealth to is one of the most important decisions you will ever make, writes Allister Heath. It is vital to look at very longterm returns, and there is no better place to find this information than Credit Suisse’s global investment returns yearbook, published today.
City AM London, p. 2

Reducing the risk with a corporate bond
Author notes that another option for your individual savings account (Isa) is to invest in corporate bonds, which are a halfway house between the safety of cash and the riskier road of stocks and shares.
Daily Express, p. 32-41

Growing interest for investment trusts
Isa investors have generally neglected a lesser-known type of fund called an investment trust but that looks set to change now. Unit trusts, which are heavily marketed by the big banks and fund managers such as Fidelity, Jupiter, Newton and Schroder, have been the most popular type of stocks and shares Isa fund up to now.
Daily Express, p. 41

Festive cash protected by the Co-op
The Co-operative Bank has created a new scheme designed to ring fence Christmas savings by placing them in a trust account managed by an independent trustee.
Daily Mail, p. 45

Cash point
Savers have been hammered thanks to the Government’s cheap money lending scheme.
Daily Mirror, p. 40

TRAP OF OWE AGE PENSION
Research from equity release firm Key Retirement Solutions shows that two in five pensioners are struggling to keep up debt repayments with average amounts owed of more than £14,500.
Daily Mirror, p. 35

Equitable Life victims ‘compensated’
More than 370,000 policyholders who had their pensions wiped out by the collapse of Equitable Life, Britain’s oldest insurance company, have been paid partial compensation, the Government has said. The Treasury claimed it has paid nearly 80pc of individual policyholders and aims to have compensated all victims of the scandal before the end of next year. It is part of a £1.5bn compensation package agreed by the Government in October 2010. But the Treasury’s third progress report on the Equitable Life Payment Scheme, published yesterday, acknowledged that nearly 6,000 compensation payments have been sent to the estates of policyholders who died before their cases were dealt with.
The Daily Telegraph Business, p. 4

Endowments fall short for thousands of homeowners
It has been announced that hundreds of thousands of home buyers with endowment mortgages ending this year will find their policies produce too little to repay the loan on their home. They are likely to see lower returns than policies that matured last year. Early evidence from insurance companies shows payments are down, even though the underlying withprofits funds where savers’ money is invested saw decent growth last year.
Daily Mail, p. 43

US sues S&P over gold rating for subprime
The government of the US is taking ratings agency Standard & Poor’s to court over the toxic subprime sludge given goldplated ratings in the run-up to the financial crisis. The Department for Justice today launched a civil claim against S&P and parent McGraw-Hill over its rating of mortgage bonds and is seeking a huge fine. The move marks the first enforcement action against a credit rating agency over alleged illegal behaviour tied to the financial crisis and could trigger a wave of lawsuits from other investors.
Evening Standard London, p. 39

MORTGAGE JOY BUT SAVERS HIT
The sluggish mortgage market is finally moving, with record low-rate deals released in the past few days, thanks to the Funding for Lending scheme.
The Sun, p. 36-37

Cable says Funding for Lending Scheme is failing to help SMEs
Banks could be forced to publish small business lending data for each region on a weekly basis, Vince Cable will say this morning, in an effort to shame them into lending more to firms.
City AM London, p. 7

WHAT THE OTHER PAPERS SAY THIS MORNING
Lord Turner, outgoing chairman of the Financial Services Authority, has launched an impassioned defence of financing government spending by printing money, arguing that within limits it “absolutely definitely [does] not lead to inflation. Speaking ahead of a valedictory speech in London today, Lord Turner, who applied to be the next Bank of England governor, called for “intellectual clarity” in economic policy, including breaking the taboo that permanently printing money to pay for government is always bad.
City AM London, p. 2

Ex-JP Morgan chief says cutting state aid for banks will aid City
Scrapping the implicit subsidy for banks and making sure they will be allowed to fail when they get into trouble should reduce public hatred for the sector and benefit the City in the long run, JP Morgan’s former investment banking head said yesterday. Bill Winters argued US banks have benefited from state support and a sense of nationalism in handing out punishments, but that London will be better served by remaining open to global finance.
City AM London, p. 3

RBS set for a miserable day as FSA readies Libor fine
Royal Bank of Scotland is expected to be hit with a fine of around £390m by the City watchdog and US regulators today over its role in the Libor rigging scandal, piling further political pressure on the bank.
City AM London, p. 1

Barclays will add £1bn to payout fund
Barclays has set aside a further £1billion to compensate customers mis-sold financial products, increasing the likelihood of much bigger payouts across the industry.
Daily Express, p. 58

Bank switch shake-up
The Government has this week announced new rules aimed at making it easier to switch bank accounts. The changes, which will come into effect in September, mean that banks will have to complete account transfers within seven working days.
Daily Express, p. 43

RBS to pay a heavy price for Libor fix
Yesterday it emerged that Royal Bank of Scotland is set to be slapped with a £400m fine for rigging interest rates. The state-backed lender is also expected to part company with investment bank boss John Hourican in a bid to satisfy pressure from regulators and the Government for a senior scalp. He will leave at the end of the month and will forfeit up to £7m. It is not known whether RBS has managed to secure a non-prosecution agreement with regulators to escape criminal charges as Barclays did.
Daily Mail, p. 63

Bring back local bank managers, says Cable
The Business Secretary, Vince Cable, is to give a speech today in which he calls for the return of the local bank manager as a means to ending what he called the “remorseless decline” in lending to small and medium sized companies.
Daily Mail, p. 16

Personal loans plunge to new low
The cost of borrowing is continuing to fall to fresh lows. Competition in the personal loan market is fierce, with banks offering rock-bottom rates. Derbyshire BS has slashed the interest rate on loans between £7,500 and £15,000 to 5.1 pc for those who can repay the debt within five years.
Daily Mail, p. 47

Top RBS ‘casino banker’ to quit
The top ‘casino banker’ at Royal Bank of Scotland will step down over the Libor rate-rigging scandal – and will be forced to return up to £7m in bonuses. John Hourican, head of the bank’s investment arm, will quit at the end of the month in an attempt to satisfy demand from politicians and regulators for a senior scalp. Mr Hourican, the state-backed lender’s most highly paid employee, will have to give up £4m in share options he was due to receive from previous years.
Daily Mail, p. 6

Pay in a cheque – 9 days later, the cash is yours
Money Mail reports that bank customers are reportedly being required to wait as long as nine days before cheques have cleared.
Daily Mail, p. 45

Outrage at call for PPI case cut-off
Whilst being questioned by the Parliamentary Commission on Banking Standards, Antony Jenkins sparked called for a deadline for PPI claims.
Daily Mirror, p. 2

BARCLAYS has set aside […]
The banking giant Barclays has set aside a further £1billion to compensate customers mis-sold financial products. The banking giant has nearly doubled its provision to cover claims for mis-selling interest rate hedging products to £850million and is putting up an extra £600m for PPI claims. This takes Barclays’ expected total bill related to mis-sold consumer products to £3.4billion.
Daily Star, p. 36

Humility is a good start, but Barclays duo still have tough decisions to make
Nick Goodway contrasts the performance of Barclays chief executive Antony Jenkins and chairman Sir David Walker in front of parliamentarians today with that of Bob Diamond and Marcus Agius last summer when the Libor-rigging scandal broke.
Evening Standard London, p. 38

Libor fines leave UBS with quarterly loss
The Swiss bank with huge offices in Broadgate, UBS, lost SFr1.9 billion (£1.3 billion) in the final quarter of 2012 after it was hit with £994 million of fines for Libor-rigging. The bank, which is cutting back on investment banking activities and concentrating on wealth management, also reduced its bonus pool for bankers by 7% and said it would pay much of those bonuses in bonds which could lose all their value if the bank got into trouble again.
Evening Standard London, p. 37

Cable revives privatisation plan as RBS unveils £390m Libor fines
Vince Cable will today revive a radical plan to return Royal Bank of Scotland to private sector hands by distributing free shares to the public as the stateowned bank announces a £390m Libor settlement with regulators.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 1

Swiss private banks ditch 200 years of history to end partner liability
Two of Switzerland’s oldest private banks, Pictet and Lombard Odier, have broken with more than 200 years of history by calling time on their existence as unlimited liability partnerships.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Companies and Markets, p. 15

Planned new collateral rules heighten risk of crunch
This week European parliamentarians debated plans to make safer the financial derivatives industry – an essential cog in the global economy – where the notional amounts outstanding on over-the-counter deals exceed $600tn.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Companies and Markets, p. 30

China injects $72bn into money markets as new year rush nears
Yesterday China’s central bank pumped a record Rmb450bn ($72bn) into money markets in an attempt to satisfy a huge demand for cash before next week’s Chinese New Year holiday
This abstract from the Financial Times was produced by Kantar Media
Financial Times Companies and Markets, p. 31

I’m shredding Bob’s legacy, says new boss
The new Barclays chief executive Antony Jenkins is “shredding” the legacy of former boss Bob Diamond, he told Parliament yesterday.
Independent i, p. 11

RBS investment chief ‘to forgo £4m in shares’
The head of Royal Bank of Scotland’s investment arm will forgo millions of pounds in share awards following political pressure from Whitehall over the Libor rigging scandal, it was reported last night.
Independent i, p. 10-11

Governor of Japan’s central bank may depart
The governor of the Japanese central bank, Masaaki Shirakawa, said Tuesday that he had offered to step down on March 19, three weeks before the end of his term, amid intense government pressure on the bank to take bolder steps to resuscitate the deflationary economy.
International Herald Tribune, p. 14

Bank rescue doesn’t quite get it right
The Dutch nationalization of SNS Reaal, a banking and insurance firm, underlines the euro zone’s weak spots while illustrating the dangers of its plans to address them.
International Herald Tribune, p. 16

RBS chief quits as bank gets £450m fine
John Hourican, the head of Royal Bank of Scotland’s investment banking arm, is to give up a bonus pot worth £4m today and resign as the bank settles over its alleged involvement in Libor-rigging. Mr Hourican’s departure is expected to be announced to RBS staff as the bank publishes details of a £450m settlement over accusations that it manipulated key global borrowing rates between 2005 and 2010. It is not known whether the bank will admit any liability.
The Daily Telegraph Business, p. 1

UBS bonuses to be part-paid as “bail-ins’
UBS has shaken up its bonus arrangements by paying bankers in a form of debt that will be wiped out if the lender runs into trouble. The Swiss bank said it will pay staff a total of SFr2.5bn (£1.76bn) in bonuses this year, about SFr500m of which will be in “bail-in bonds” that can be written off against bad debts if its capital ratio buffer falls below 7pc. UBS also reduced bonus payouts by 7pc on last year. The reforms mean executives will receive 40pc of their award in bail-in bonds, which will pay them annual interest of up to 7pc. Another 40pc of their award will be in shares that vest in equal tranches in years three, four and five. Only 20pc will be in cash.
The Daily Telegraph Business, p. 4

Will Carney reverse three decades of Bank history?
Hamish McRae comments on monetary policy. Mark Carney, the Bank of England’s newly-appointed Governor, will be before the Treasury Select Committee tomorrow.
The Independent, p. 20

BANK BOSS PUTS BOB IN SHREDDER
The new boss of Barclays put Bob Diamond through the shredder yesterday – and panned his legacy of scandal. Chief executive Antony Jenkins admitted the bank had to break with the aggressive reputation that took root under his predecessor.
The Sun, p. 36-37

Barclays is set to […]
Barclays is set to announce the closure next week of a division that was accused yesterday of “industrial-scale tax avoidance” by a former chancellor. It is understood that Antony Jenkins will announce significant changes to the bank’s structured capital markets unit, with sources confirming that closure is a possibility.
The Times, p. 37

Return to golden age for investment is ‘delusional’
For much of the second half of the 20th Century, investors enjoyed a golden age – but those hoping for a repeat once the crisis has passed are ‘delusional’, according to a research.
Daily Mail, p. 64

Shirakawa exits early as Abe pushes for stimulus
Masaaki Shirakawa, the Bank of Japan governor, is to step down almost three weeks before the scheduled end of his five-year term.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 6

Moody’s warns of struggle to refinance debt if rates rise
Companies with the most fragile balance sheets could struggle to refinance about $86bn of debt maturing in the coming years should rates rise sharply or sovereign debt problems reduce European banks’ lending capacity, Moody’s Investors Service warned in a report.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Companies and Markets, p. 30

Dollar hits high against yen
Yesterday the dollar hit its strongest level against the Japanese yen since May 2010 after the head of Japan’s central bank said he would step down earlier than expected, fuelling optimism that a new regime would act to combat deflation and weaken the yen.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Companies and Markets, p. 32

Investors face end of big capital gains from bonds
Fear that interest rates could rise in the US have led to a sell-off in debt, write Stephen Foley, Dan McCrum and Michael Mackenzie.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Companies and Markets, p. 31

Asset managers shine on rallying FTSE as appetite for risk returns
Market report noting that Barclays has argued that those traders looking for exposure to equities should buy into FTSE 250-listed asset manager Jupiter Fund Management, up 8.1 at 337.7p.
The Daily Telegraph Business, p. 7

Asset manager fears prove groundless
Market report leading with punters fearing that profitable asset managers would be few and far between after the abolition of commission, thanks to the introduction of the Retail Distribution Review (RDR) at the start of this year. They thought the impact would be so severe on firms like Bristol-based Hargreaves that it would be better to sell out. But six weeks into life with RDR and asset managers are still breathing. In fact, with the stock market making a recovery, the share price of asset managers could be benefiting from canny investors who spotted that they do well when equities are in favour.
The Independent, p. 56

Europe does not have the funds to solve sovereign debt crisis
Editorial comment on the European equity and bond markets reflecting a growing belief that the eurozone and the European Central Bank (ECB).
The Independent, p. 54-55

Don’t lose sight of your main target, experts tell the Bank of England
The Chancellor George Osborne has been urged not to tamper with the Bank of England’s inflation-fighting mandate, despite recent lobbying for the Bank to take more aggressive steps to boost growth.
The Times, p. 35

AThe above articles appeared on 06/02/13 reproduced with the kind permission of Kantar Media UK. All rights reserved.

Charterbridge Private Financial Planning, Independent Financial Advice, Thornbury, Bristol.