Weekend economic news round up

Charterbridge

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Weekend economic news round up

Thrift is back in fashion as Britons put their faith in Isas
New figures from the Office for National Statistics show that a record £57.3bn was deposited in Isas last year.
The Times, p. 41

Property experts fear Help to Buy ‘bubble’
George Osborne has been warned that his flagship Help to Buy scheme to revive the housing market could drive up house prices and create a dangerous property bubble. The Treasury has unveiled plans to underwrite a further £130bn of mortgage lending from next January through Help to Buy. A number of property experts question the move.
The Independent, p. 51

Co-op savers ‘come second to stability’
The stability of the financial system is more important than the losses faced by savers who invested money in the Co-operative Bank, regulators have declared. The Co-op has launched a raid on bond-holders as part of a plan to raise £1.5bn to plug a black hole in its books – slashing the incomes of thousands of pensioners. The plan has the backing of the Bank of England and its Prudential Regulation Authority, which is responsible for making individual lenders safe. The Co-op Group yesterday sold its life insurance and asset management business to Royal London for £219m as part of its plan to bolster its banking arm.
Daily Mail, p. 87
Also appeared in : Financial Times, p.14

Church-backed lenders may charge up to 80% interest, admits Welby
The Archbishop of Canterbury today admitted Church of England-backed lenders could loan cash to hard-up householders at an 80 per cent annual interest rate.
Evening Standard London, p. 7

S&P warns Iceland over debt write-off
Standard & Poor’s yesterday warned against a pledge by Iceland’s new government to write off 20 per cent of all citizens’ mortgage debt.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 4

Japan posts highest inflation since 2008
Japan reported its highest rate of inflation for nearly five years, largely as a result of electricity price increases.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 4

Barclays ‘bond sale’
Barclays issuing billions of pounds’ worth of bonds and shares to boost the capital it holds against possible future losses in a financial crisis.
The Times, p. 41

Church ‘is investing in an imperfect world’
Edward Mason, the ethical finance chief of the Church of England, has defended its investment policy despite its stakes in businesses blamed variously for pollution, tax dodging, animal cruelty and child labour. One of the few companies from which the Church has withdrawn recently is News Corp, owner of The Times, following the phone-hacking scandal.
The Times, p. 9

UBS agrees settlement over mortgage bonds scandal
UBS is to pay almost $900 million to settle the allegations that the bank misrepresented mortgage-backed bonds during the housing bubble.
The Times, p. 46

Talk of £7bn fund-raising to meet Barclays capital ratio
Barclays is believed to be considering raising as much as £7bn to bolster its capital position, following talks with the Bank of England.
The Guardian, p. 28

£400M CASH CRASH CROOK
A businessman at the centre of a car crash insurance scam which costs honest drivers £400million a year can today be exposed by The Sun. Raja Waqas and his brother Bilal boasted that they have staged more than 200 accidents in the last seven years. They operate a “crash for cash” racket that adds about £44 a year to each UK motor insurance policy.
The Sun, p. 24-25

Payout Protest
The treasury has been warned to step up efforts to trace and pay Equitable Life policyholders due compensation before next year’s March deadline, reports Richard Dyson.
The Sunday Telegraph Money, p. 2
Also appeared in : The Sunday Times Money, p.2

Mortgage help sparks boom – and fears of another crash
It is widely accepted that the Government’s Help To Buy scheme is already aiding the recovery of Britain’s housebuilding industry, but analysts fear another initiative being launched in a few months risks creating a housing market bubble. Under the Help To Buy Mortgage Guarantee Scheme, details of which were announced a few days ago, a buyer needs only a 5 per cent deposit, while participating lenders would have the next 15 per cent of any loan underwritten by the taxpayer.
The Independent on Sunday, p. 82-83

Foxtons eyes des res at exchange
Foxtons, the estate agency sneaked out its performance numbers on Friday with sales up 2.8% to £117.7m in the year to last December, underlying earnings hit a record £37.9m and it opened a wave of new branches, bringing the total to 42. The agency is known for its aggressive manner and the fact that it uses green and yellow Minis.
The Sunday Times Business, p. 12

Taxpayers out of pocket as RBS goes back to black
Lloyds Banking Group is in rude financial health it will be revealed this week, allowing the taxpayer-backed bank to be privatised, possibly within days. Analysts predict it will report a £1.7bn pre-tax profit as the turn-around under outgoing chief executive Stephen Hester gathers momentum.
Sunday Express Financial, p. 2
Also appeared in : Sunday Express Financial, p.1

£15 billion put aside but PPI claims have peaked
Britain’s banks have set aside around £15bn to compensate victims of payment protection insurance (PPI) mis-selling, according to industry estimates. However, Britain’s bank chiefs believe that the number of people making PPI claims has peaked and that they will not need to keep topping up their individual compensation funds.
Sunday Express Financial, p. 3
Also appeared in : The Sun, p.6, Sunday Mirror, p.4, The Mail on Sunday, p.79

Regional banks ‘can solve funding crisis’
Regional banks are the answer to the funding crisis faced by hundreds of thousands of small businesses, experts say. Net bank lending of £100bn to small and medium-sized enterprises was £4bn lower in all regions in 2012 than the year before, according to figures released last week by the British Bankers’ Association.
The Mail on Sunday, p. 84

Curb on card fees brings £1 billion windfall – but you won’t get a penny
There are plans by the European Commission to cap the fees British businesses pay to credit and debit card companies such as Visa and MasterCard. This weekend it emerged that major retailers including Sir Philip Green’s Topshop-to-BHS empire Arcadia Group, Asda, Debenhams, Next and B&Q are to sue Visa. The retailers are claiming billions on fees going back a decade.
The Mail on Sunday, p. 81

We need Nationwide directors who care – not bosses with snouts in the trough
Members of Nationwide have criticised the building society’s directors for pocketing bonuses big enough to ‘create instant millionaires’, when they should be providing better interest rates for savers.
The Mail on Sunday, p. 88

Mutual plugs black hole but fat-cat salaries stay
Nationwide has announced proposals to plug the £1bn hole in its books discovered by financial watchdog the Prudential Regulatory Authority. Nationwide had a 2pc ratio but was told to raise it to 3pc last month. This may cost it up to £1bn.
The Mail on Sunday, p. 88

Farah protest runner ask Barclays not close transfer firms
The Treasury will look into the decision by major high street banks, including Barclays, to withdraw support from companies which transfer money to developing countries. Lord Deighton, the commercial secretary to the Treasury, has confirmed that the Government is set to assess the impact of the decision by the banks on families of UK residents living in a number of countries in Africa and Asia.
The Sunday Telegraph Business, p. 3

Barclays eyes £4bn share sale
In an attempt to answer the Bank of England’s concerns over its financial strength, Barclays is reportedly plotting a possible £4bn share sale. It is claimed that Barclays is struggling to meet a new rule imposed unexpectedly by the Bank, called the leverage ratio. This will force all British banks to hold capital equivalent to 3% of the money they have lent.
The Sunday Times Business, p. 1-2

Virgin joins fast switching crusade
More than 25,000 people have expressed an interest in Virgin Money’s current accounts, set to be unveiled in the autumn.
The Sunday Times Money, p. 3

CVC refinances £1.6bn Formula 1 loan
CVC has refinanced a $2.5bn (£1.6bn) loan with the Royal Bank of Scotland and Goldman Sachs to reduce the borrowing costs of Formula 1, the motorsport series which it controls.
The Sunday Telegraph Business, p. 2

Singapore joins Urenco pursuit
GIC, a sovereign wealth fund backed by the government of Singapore, and Mitsubishi, the Tokyo-based conglomerate, have joined a large international cast of bidders circling Britain’s government-backed nuclear fuel-maker Urenco.
The Sunday Times Business, p. 3

How to pick the right financial help
About 700,000 people have stopped taking financial advice in the past year following the overhaul of the market by regulators, according to research.
The Sunday Times Money, p. 4-5

The above articles appeared on 27/07/13 & 28/07/13 reproduced with the kind permission of Kantar Media UK. All rights reserved.

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