Banks on the mend as legal and conduct charges drop
UK banks have turned a corner with annual conduct and litigation charges falling by £3.7bn in 2016. Charges climbed to a six-year peak in 2015 of £14.5bn, according to S&P Global ratings. The ratings agency looked at Barclays, HSBC, Lloyds and the Royal Bank of Scotland. Since 2011 the four banks have paid aggregated charges of £66bn, and accounted for 90% of all conduct and litigation charges in the UK. Charges are expected to fall again this year. S&P said: “ …we expect total conduct and litigation charges to continue to gradually subside. We believe 2016 will prove to be the last year in which charges remain the outsized levels we have seen recently. That said, we acknowledge that new conduct issues may emerge and that the timing of such charges is uncertain, given the complex nature of pending legal settlements.”
Global survey reveals money market funds remain a popular choice
Sentiment towards money market funds remains strong, according to the J.P. Morgan Global Liquidity Investment PeerReview survey. A poll of 378 chief investment officers, treasurers and decision makers from around the world found that over 60% will continue with the same asset allocation to money market funds, while 22% will increase their allocations to stable NAV funds and 20% to floating NAV funds. To read the full report click here.
Merseyside Pension Fund stocks up on warehouse investment
A regional property fund focused on investing in distribution warehouses around the UK has attracted investment from the Merseyside Pension Fund. Run by Barwood Capital, the fund hopes to deliver a net internal rate (IIR) of return of 15%. A previous Barwood fund returned 12% IRR. Joanna Greenslade, Barwood’s managing director, said industrial and logistics “was the best performing commercial property subsector in 2016 and is widely regarded as having the strongest growth prospects across all sectors over the next five years”. Harwood closed its initial phase of fund raising at £42m. The investment firm described Merseyside’s involvement as “material”.
Warrington-backed challenger bank appoints chairman
Redwood, the challenger bank backed by Warrington Council, has appointed David Buckley, a former European CFO for Morgan Stanley, as chairman and a non-executive director. Buckley is joined by Nigel Boothroyd, a former HSBC executive, as a non-executive director. The bank won its licence to trade from the Financial Conduct Authority in April. Redwood Bank is backed by an investment of £30m from Warrington, a 33% stake. The bank is due to open for business this summer. Writing for Room151, Warrington’s corporate manager Danny Mather said the main reason Warrington had invested was “is to increase SME lending in the borough and nationally. This follows a policy directive by members in 2013 and the results of a local business survey carried out in 2013.”
Water customers better of under public ownership
Local authorities across Europe have been taking water companies back under public control, according to the Financial Times. The FT reports that Paris-Sorbonne University found in a study that the price of water from companies run by municipal owners was 16.6% lower than that provided by private companies. According to a report from the University of Greenwich, UK customers pay £2.3bn more a year for water under the current privatised system of ownership than they would if water had been retained by the state.
