Weekend economic news round up

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Weekend economic news round up

Worries over negative rates
Yesterday savers’ groups reacted angrily to the suggestion of negative interest rates as a stimulus measure. Giving evidence to a parliamentary committee, Paul Tucker, deputy governor of the Bank of England, raised the possibility of imposing negative interest rates on a portion of banking reserves.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 2

‘Transition needed’ for flat-rate plan
A parliamentary committee was told this week that the government should offer transitional protection to hundreds of thousands of women who fail to qualify for the new single-tier state pension.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 3

Cowie’s blog week
Extracts from Ian Cowie’s blog about the great annuity rip–off, noting that the Association of British Insurers (ABI) is still struggling – and failing – to force its members to provide pensioners with fair value.
The Daily Telegraph Your Money, p. 16

Mortgage approvals down but business borrowing up
Yesterday data released by the Bank of England showed that the number of approvals for house purchases dipped to 54,719, compared with 55,632 in December. The number of approvals for remortgaging fell to 25,573 – below the six-month average.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 4
Also appeared in : The Daily Telegraph, p.31, The Times, p.52, The Times, p.57

Mortgage lending by mutuals rises 25% to £2.4bn
Gross mortgage lending by building societies and mutual lenders reached £2.4bn in January, according to research by Deloitte.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 16

£1m-plus loans return to the high street
Mortgage seekers looking to borrow more than £1m-plus can now find more choice on the high street as lenders eye up the large loan market. Nationwide, Halifax, Woolwich, Clydesdale Bank, Yorkshire Building Society, HSBC and NatWest are just some of the high street names that will now consider lending above £1m.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 5

B of I mortgage shock
It has been revealed that thousands of buy-to-let landlords will be hit by a doubling of their mortgage interest rates after Bank of Ireland said it planned to increase its tracker rates.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 2

Home ownership sinks to 25-year low and could continue shrinking
Home ownership in the UK is at its lowest level since the mid-80s and with prices remaining flat, ownership levels could shrink further, figures have revealed.
Independent i, p. 4

‘With–profits returns are on a downward spiral’
Over a million home buyers whose endowment mortgages are due to mature this year will be dismayed to learn that with–profits payouts are now typically worth a third less than they were five years ago, says Teresa Hunter.
The Daily Telegraph Your Money, p. 12

Banks raise charges as rates hit new low
Mortgage rates for new customers dropped to new lows today and talk of negative interest rates has fuelled hope of further cuts, but not everyone is celebrating.
The Times, p. 72

Taylor Wimpey doubles profits
Taylor Wimpey, the UK’s second-largest housebuilder by volume, said profits more than doubled as it sold more homes at increased prices, aided by government schemes to boost the mortgage market.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 16

Gilts sales cut Lloyds losses by £3.2bn
Lloyds Bank yesterday reported a pre-tax statutory loss for last year of £570m, largely as the result of £3.98bn of provisions against payment protection insurance and interest rate swap mis-selling claims.
The Daily Telegraph, p. 31-32
Also appeared in : The Independent, p.54, Independent i, p.46, Financial Times Money, p.2, International Herald Tribune, p.17

Taxpayer stakes in bailed-out banks may be sold off cheaply
The government could sell off its stakes in the bailed-out banks at prices substantially lower than expected after it linked the payment of a £1.5m bonus to António Horta-Osório, the boss of Lloyds Banking Group, to selling part of the taxpayers’ stake.
The Guardian, p. 5
Also appeared in : Financial Times, p.1, The Times, p.53, The Times, p.52

Barclays claws back £300m of bonuses from its staff
Barclays embarked on the biggest effort of a global bank to strip its staff of promised bonuses when it withheld £300m in unpaid performance awards.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 14

Interest rises in battle of current accounts
The Nationwide building society has sent a fresh challenge to banks in the war to win our custom by offering 5 per cent on its FlexDirect account.
The Independent, p. 61

More with-profits gloom predicted
It has emerged that millions of with-profits policyholders are being urged to consider cashing in their investments or face years of disappointing returns. The call comes from financial advisers after some of the country’s biggest life offices again cut bonuses and final payouts in spite of seeing stronger returns on their underlying funds.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 4

Old Mutual sets aside funds for sub-¬Saharan Africa push
The chief executive of Old Mutual hailed the insurer’s global retrenchment strategy a success yesterday as he set aside $550m to fund acquisitions in sub-Saharan Africa.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 17

Monte dei Paschi sues former management
Italy’s third-largest bank by assets, Monte dei Paschi di Siena, has launched legal actions against former management, and Deutsche Bank and Nomura, over structured products relating to millions of euros of losses.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 17
Also appeared in : International Herald Tribune, p.1, Financial Times, p.13, International Herald Tribune, p.15

£ Unhappy returns on with-profits
Millions of savers who hold with profit investment bonds, pensions or endowments are in the process of finding out how well their money is performing as insurers announce the bonuses they are adding to policies.
The Independent on Sunday, p. 92

THE BEST PENSIONS IN THE WORLD
Pensions feature looking at how other countries deal with retirement savings, with Australia and New Zealand seen as the templates for Britain’s automatic enrolment scheme.
The Sunday Telegraph Money and Jobs, p. 8-9

THIS WEEK HALIFAX’S £500 OFFER
Halifax is offering first-time buyers who take out one of its mortgages £500 towards moving costs in a further sign of the gradual loosening of the home loan market.
The Independent on Sunday, p. 93

HSBC rewrites record books with new deal
Mortgage rates continue to fall, with HSBC the latest high street provider to launch a lowest-ever fixed-rate loan.
The Observer, p. 49

LANDLORDS REPRIEVED LENDER AXES TENANT RULE
Nationwide has been forced to climb down over plans to restrict mortgages to landlords who accept housing benefit.
The Sunday Telegraph Money and Jobs, p. 2

Shock rise hits tracker rates
Borrowers with tracker mortgages have been urged to check the small print on their loan agreements after the Bank of Ireland announced last week that 13,500 customers on tracker loans tied to Bank rate will see their repayments more than double. The move is similar to a change made by Skipton building society in 2010, and brokers warn that a loophole in tracker rates offered by other lenders, including Barclays, NatWest and Bank of Scotland, also gave them the ability to raise rates when Bank rate is flat.
The Sunday Times Money, p. 1

Banks fight for current account customers
Nationwide’s current account customers are being offered 5 per cent interest on their cash, but only for a year.
The Sunday Telegraph Money and Jobs, p. 10

HSBC to report best results since credit crisis
HSBC is set to report a pre-tax profit of more than $23bn (£15bn), the bank’s best result since before the financial crisis, as it enters the final year of its turnaround plan. Chief executive Stuart Gulliver see his potential pay package drop following the fine. Sky News reported last night that the bonus figure could be £2m and that the amount will be deferred and subject to clawback.
The Sunday Telegraph Business, p. 1
Also appeared in : The Independent on Sunday, p.86, The Sunday Times Business, p.1

Crossword Which? calls for tighter credit controls
The Government has been urged by one of the UK’s biggest consumer groups, Which?, to immediately clean-up the credit marketplace. Payday loans particular concern Which? after its recent survey showed that 24 per cent of people with such a loan use it to meet repayments on other loans, such as for cars or mortgages.
The Independent on Sunday, p. 97

Aviva £2.3bn in the red after huge loses in sale of US arm
Aviva will fall deeply into the red this week when it writes off around £2bn from the value of its former US business. This is expected to force the FTSE 100 insurer to post a loss of more than £2.3bn when it reports its full-year numbers on Thursday, the first results under new chief executive Mark Wilson.
The Independent on Sunday, p. 85
Also appeared in : The Sunday Times Business, p.3

Aviva set for growth as profits approach £55m
Aviva is set to announce profits of £155m this week as analysts question whether the insurer will cut its dividend.
The Sunday Telegraph Business, p. 3

Bank facing crunch call on more QE
The Bank of England faces a “nailbiting” decision over pumping billions more into the UK recovery this week as figures reveal the still-sluggish impact of its flagship initiative to boost lending.
The Independent on Sunday, p. 85
Also appeared in : The Sunday Times Business, p.1

EU pay cap ‘ major risk ‘ to City jobs
Enterprise minister Michael Fallon has warned that the proposed EU cap on bankers’ bonuses would put hundreds of thousands of British jobs at risk and said that the Treasury will demand at meetings in Brussels this week that the proposals are flexible enough to allow UK banks and foreign banks based in London to pay competitive rates.
The Sunday Telegraph Business, p. 1

Russian mob money ‘props up Cyprus’
It is believed that Russian mobsters laundering money via Cypriot banks could be propping up the tiny countries economy.
The Sunday Times, p. 32

Treasury to unveil ‘simple’ accounts
The Treasury’s independent steering group on simple financial products, set up by the Treasury in October 2011 and is headed by the former Lloyds chief risk officer, Carol Sergeant, is to unveil its plans for a no-frills suite of simpler savings and insurance products this week.                       The Sunday Times Money, p. 4

Minus strike
The Treasury select committee was this week told by the deputy governor of the Bank of England, Paul Tucker, that the Bank was considering possibility of below-zero interest rates.
The Sunday Times News Review, p. 8-9

The above articles appeared on 02/03/13 & 03/03/13 reproduced with the kind permission of Kantar Media UK. All rights reserved.

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