Weekend economic news headlines

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Weekend economic news headlines

Low savings rates make help harder for parents
It has been reported that returns from cash savings are crushing parents’ hopes of helping their children to get a foot on the housing ladder, as interest rates are outstripped by house prices over the long term. Almost half of the parents helping their children to buy their first property are using cash savings. But analysis from financial services firm Castle Trust has revealed that to keep pace with house prices, as measured by the Halifax House Price Index over the past 10 years, savers would have to find dramatically better rates.
The Independent, p. 51
Also appeared in : The Daily Telegraph Your Money, p.1

Watch out for hidden interest rate cuts, savers are warned
An investigation by The Daily Telegraph has found that 76 lenders had reduced the rate paid on easy access savings accounts between January and June despite the Bank of England’s base rate remaining the same. Experts said the cuts took the average interest paid on the accounts from 1.14 per cent to 0.97 per cent.
The Daily Telegraph, p. 1-2

Millions missing out on pension scheme
Figures announcing the millionth worker automatically enrolled into a workplace pension have also revealed that huge swathes of the working population have already been left behind. Introduced last October in a bid to reverse the decline in pension saving, the largest firms have started signing up staff to the nationwide scheme, with medium and small scale companies set to follow suit between now and 2018.
The Independent, p. 51

Fears of housing bubble grow as prices rise by £60 a day
Nationwide yesterday reported that the average house price rose by 0.8 per cent last month to £170,825, equivalent to £60 a day. The average price has increased by nearly 4 per cent compared with July last year and has leapt 12 per cent from the low point of the recession. The figures have raised fears among some economists that a new housing bubble similar to the situation before the credit crisis is starting.
The Daily Telegraph, p. 8
Also appeared in : Daily Mirror, p.51, Financial Times, p.2

Foreigners fuel London housing boom
The majority of new homes in central London are being sold off at glitzy overseas sales events, before being advertised to UK buyers.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 1
Also appeared in : The Daily Telegraph Your Money, p.2-3

Funding for Lending splits brokers
One in four mortgage brokers believe the government’s Funding for Lending Scheme hasn’t lived up to expectations, according to research.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 2

Add-ons by banks may be next crisis
Financial experts are warning that current accounts with paid-for extras such as travel insurance and breakdown cover could be the next banks’ mis-selling scandal, affecting up to two million people.
The Times, p. 6
Also appeared in : The Times, p.51

26% ‘ready to switch’ account
New rules to make switching bank account quicker and easier are just weeks away, and a survey suggests one in four of us are “actively thinking” about making the move. An industry-wide seven-day switching service will go live in mid-September, and offers a guarantee of a refund of interest and charges on a customer’s old and new current accounts if anything goes wrong. The switch will be completed in seven working days – a substantial improvement on the current 18 to 30 working days. This week, research from M&S Bank indicated that 26% of current account holders are ready to switch.
The Guardian Money, p. 2

Hester signs off with a flourish as RBS reports ‘highly symbolic’ first-half profit
The state-owned Royal Bank of Scotland yesterday achieved its longest period of profitability since its near-collapse in 2008 as Stephen Hester prepared to hand over as chief executive to Ross McEwan. The bank reported a £1.4 billion profit in the first half of this year against a £1.7 billion loss this time last year.
The Times, p. 43
Also appeared in : Daily Mail, p.10, Daily Mail, p.83, Daily Express, p.2, Evening Standard London, p.40, The Times, p.43, The Times, p.41, The Independent, p.44-45, The Independent, p.44-45, The Guardian, p.30, The Guardian, p.6, The Guardian, p.40, The Daily Telegraph Your Money, p.4, The Daily Telegraph, p.25, The Daily Telegraph, p.26, Independent i, p.46, The Daily Telegraph, p.26, Daily Express, p.65, Daily Mirror, p.51, International Herald Tribune, p.12, Financial Times Money, p.2, Financial Times, p.20, Daily Star, p.2, Financial Times, p.10, Evening Standard London, p.14, Financial Times, p.11

HSBC auditor switch raises concerns for banks’ health
Financial experts are warning that Britain’s banking sector could be at greater risk of systemic failure after PwC landed HSBC as an audit client despite already signing off the accounts of Lloyds Banking Group and Barclays.
The Times, p. 41
Also appeared in : Evening Standard London, p.41, The Times, p.42, The Independent, p.45, The Daily Telegraph, p.26

Banks given deadline
The Prudential Regulation Authority yesterday said that banks would have until 2015 to reach a ratio of 8 per cent total capital to risk-weighted assets. In the same announcement the PRA said foreign investment banks in Britain face a capital shortfall of £29bn under new European Union capital rules.
The Daily Telegraph, p. 27
Also appeared in : The Times, p.45, Financial Times, p.10, Daily Mail, p.83

With case against trader, SEC relishes victory
For Wall Street’s top regulator, the jury verdict against a former Goldman Sachs trader at the centre of a toxic mortgage deal was its first significant courtroom victory in a case stemming from the financial crisis.
International Herald Tribune, p. 11
Also appeared in : Financial Times, p.12

Anglo Irish to sell €22 billion in loans
The nationalized Irish lender Anglo Irish Bank plans to sell €22 billion worth of loans as part of its liquidation, the bank’s special liquidator said Friday.
International Herald Tribune, p. 12

Banks face American inquiry over derivatives rate-fixing claims
The Commodity Futures Trading Commission has reportedly been handed evidence that traders at some of the world’s biggest banks manipulated a key rate for derivatives, pocketing millions of dollars at the expense of pension funds in the process.
The Daily Telegraph, p. 25

Credit Suisse issues $2.5bn ‘wipeout’ bond
Credit Suisse has issued a $2.5bn ‘wipeout’ bond as lenders across Europe prepare to do the same.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 14

Gilts
UK government bonds fell after robust house price and construction data sparked speculation that the Bank of England would raise interest rates sooner.
The Times, p. 49

Irish bank upbeat
Bank of Ireland has taken a big step on the long road back to profitability after four years of bailouts totalling nearly €30 billion (£26 billion).
The Times, p. 41

Carney to outline his recovery plan
Mark Carney will next week outline how he plans to get the economy motoring again in his new role as governor of the Bank of England. The big idea is ‘forward guidance’ to reassure investors, businesses and households that interest rates will remain at ultra-low levels for some time to come.
Daily Mail, p. 84

JPMorgan pays out $410m in power-fixing settlement
JPMorgan Chase this week agreed to pay $410mn to settle allegations that it manipulated power markets.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 11

Younger workers to retire aged 70
The state retirement age could rise to 70 or beyond for today’s twentysomethings under a change proposed in the government’s new Pensions Bill.
Sunday Express Financial, p. 1

Happy retirement
Savers who have been disciplined about building up a pension pot for later life are being warned they are likely to be disappointed when they stop working, as they won’t have put away enough to provide the income they were expecting in retirement. Recent research by Axa Life Invest found that annuity rates have actually declined by 29 per cent since the Bank of England’s programme of quantitative easing (printing money) began in 2009. At the same time, interest rates have remained frozen at 0.5 per cent for more than four years.
Sunday Express Financial, p. 6

Don’t rely on scaling down to fund pension
Thousands of homeowners relying on their property to fund their retirement have been warned that downsizing may not release the capital they need. People approaching retirement often sell their home and release capital to provide a source of income when they stop work.
The Sunday Times Money, p. 10
Also appeared in : The Independent on Sunday, p.79

Treasury lines up Help to Buy exit
Treasury officials have held talks with private insurers about taking on the Help to Buy scheme’s £12bn liabilities when the housing initiative ends. The Treasury has held talks with several private companies about Help to Buy. They include Genworth, the insurer that bought out Australia’s state mortgage guarantor, the Housing Loans Insurance Corporation, in 1997.
The Sunday Times Business, p. 2

Agents’ tricks return to property market
Homebuyers are being pressured to use services provided by estate agents or risk losing out on properties. Jo Eccles, head of Sourcing Property, a buying agency that finds homes for private clients, said: “A client in Fulham was bidding on a completely dilapidated house and there was a lot of interest from developers. He won the bid after agreeing with the estate agent that he would speak to the agent’s affiliated solicitor and mortgage broker.”
The Sunday Times Money, p. 3

Find a path through the mortgage maze
Homebuyers struggling to get on the property ladder face a challenge when it comes to securing a mortgage because banks impose vastly different loan criteria. Some high street banks allow customers to borrow more than twice as much as other lenders, according to research for The Sunday Times by Trinity Financial, the broker.
The Sunday Times Money, p. 3

London homes go to foreign buyers
Fears have been raised over that British property buyers being frozen out of the market as research shows more than half of buyers of properties in Central London were from Singapore, Hong Kong, China and Malaysia.
The Sunday Times, p. 5

Challenge of turning off the ‘loose money’ tap
Analysis looking at how each month this year, via its quantitative easing programme, the Federal Reserve has been buying up $85bn (£55.8bn) of financial assets – a mix of US Treasuries and mortgage-backed securities. The idea has been to lower long-term interest rates to encourage a broad-based recovery in economic activity and, more specifically, a pick-up in the US housing market.
The Sunday Telegraph Business, p. 4

Fears for older customers as banks axe paying-in slips
Banks have been accused of making life difficult for older customers by removing paying-in slips from branches and failing to send out paying-in books. Lloyds Banking Group, which owns Halifax and Bank of Scotland, said it had removed the slips from branches as a “customer improvement”. Some rivals, including Santander, do not offer the slips or books at all, while Barclays said it is introducing a new process that means they will not be needed. It stopped sending out the books automatically two years ago.
The Sunday Times Money, p. 6

Carney set for interest rate promise to lift economy
The Bank of England is expected to raise its growth forecasts and lower its inflation outlook this week as the Governor Mark Carney on Wednesday unveils a radical new commitment to low rates in what is likely to be a further boost for the recovery.
The Sunday Telegraph Business, p. 1
Also appeared in : The Independent on Sunday, p.73, The Mail on Sunday, p.80

HSBC lifts earnings 15%
HSBC is due to report a 15% rise in interim profits tomorrow as three years of radical restructuring continue to bear fruit. The bank is forecast to report pre-tax profits of $14.6bn (£9.5bn), according to a poll of 14 analysts.
The Sunday Times Business, p. 2
Also appeared in : Sunday Express Financial, p.3, The Sunday Telegraph Business, p.2

Lloyds chief in line for £2m bonus
Proposals for a government sale of shares in Lloyds Banking Group, and a surge in the lender’s stock market value, have put chief executive Antonio Horta-Osorio in line for a bonus windfall worth well over £2m far more than the sum outlined by the bank just five months ago.
The Sunday Times Business, p. 1
Also appeared in : Sunday Express Financial, p.1

How rogue private investigators stole bank details for Lloyd’s of London
John Spears, a private investigator jailed last year for paying a ‘blagger’ to steal bank details, has revealed that his biggest clients were insurers at Lloyd’s of London. Mr Spears, a former Metropolitan Police detective, is one of four ‘rogue’ private detectives whose clients form the basis of a secret list of 102 blue-chip companies and law firms held by the Serious Organised Crime Agency (Soca).
The Mail on Sunday, p. 23
Also appeared in : The Mail on Sunday, p.80

Investors warn new RBS chief executive over break-up battle
Ross McEwan, the new chief executive of the Royal Bank of Scotland, was facing his first challenge this weekend after leading shareholders signalled they would not support breaking it up even if the Treasury backed the move.
The Sunday Telegraph Business, p. 1

peer-to-peer lenderdefends Santander tie-up
Funding Circle, the online “peer-to-peer” SME lender, has defended controversial discussions with Santander which could see the bank passing on “leads” on small businesses seeking loans to the alternative finance platform.
The Sunday Telegraph Business, p. 3

Farah piles pressure on Barclays to cancel ban on money-transfer firms
Barclays bank is under growing pressure to reverse a “kneejerk” decision to pull the plug on UK companies that make it possible for people to send money home to families in some of the world’s desperately poor countries. Runner Mo Farah has thrown his weight behind a campaign to stop the bank closing the accounts of 250 UK money-transfer companies operating what Farah called a “lifeline” into poor countries. “The Mo Farah Foundation, along with some of the world’s biggest charities and organisations, including the UN, relies on these businesses to channel funds and pay local staff,” he said. “This decision could mean life or death to millions of Somalis.”
The Observer, p. 21

Co-op’s bank rescue is at risk from hedge funds…
A group of vulture hedge funds are threatening to undermine the Cooperative Group’s last-ditch plan to rescue its stricken banking arm after amassing major positions in £300m of the lender’s bonds.
The Sunday Telegraph Business, p. 3

Ex-Lehman boss plots raid on under-fire metal trader
The London commodities broker backed by Jeremy Isaacs, former head of Lehman Brothers Europe, is in talks to buy the JP Morgan Chase subsidiary, Henry Bath, caught in a storm over metal prices.
The Sunday Times Business, p. 1

Consulates in chaos as HSBC cuts off their cash
Diplomats in London have been thrown into chaos after Britain’s biggest bank, HSBC, sacked them as customers and gave them 60 days to move their accounts. Their situation has been made far worse because other banks have been closing ranks and refusing to take their business.
The Mail on Sunday, p. 79-80

Hopes of quick Lloyds sell-off are dashed
George Osborne will not sell any of the government stake in Lloyds Banking Group until September, dashing recent hopes in the City of a sell-off as early as this week.
The Mail on Sunday, p. 80

REVENGE
Iain Dey looks at how Barclays had its wings clipped by the new City regulator, the Prudential Regulation Authority (PRA), forcing it to unveil a £5.8bn share issue under the so-called leverage ratio.
The Sunday Times Business, p. 9

Goldman predicts FTSC to hit record 7,500
London’s FTSE 100 index could break through its previous record to reach 7500 in 12 months’ time, according to analysis by the investment bank Goldman Sachs. Recent central bank developments have also paved the way for equity indices to climb higher. The Bank of England and the European Central Bank opted to keep interest rates at record lows.
The Sunday Telegraph Business, p. 3

Fund fees made easy
Investors will see fund charges given in a simple pounds and pence figure, under proposals from the Investment Management Association.
The Sunday Times Money, p. 2

US banks are roaring ahead. Ours, however . .
Analysis looking at how the UK is becoming unhealthily obsessed with single geography retail banking and limited scale services to small and medium-sized businesses. The danger is that in a decade’s time Britain will have an overly fragmented domestic banking sector where up to eight major players are left scrapping to gain market share. The big five – HSBC, Barclays, RBS, Lloyds and Santander – will be joined by two over the next year as both RBS and Lloyds are obliged to sell branch networks as part of the bail-out deal agreed with the European Union.
The Sunday Telegraph Business, p. 2

The above articles appeared on 03/08/13 & 04/08/13 reproduced with the kind permission of Kantar Media UK. All rights reserved.

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