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COMMΞЯCIΛL ΛWΛЯΞNΞSS | 20.05.24

COMMΞЯCIΛL ΛWΛЯΞNΞSS | 20.05.24

A rundown of things that you should know about from last week 20.05.24

  • 4TH JULY GENERAL ELECTION

Prime minister Rishi Sunak announced on Wednesday 22nd May 2024  that a general election will be held on 4 July, following a day of intense speculation in Westminster.

The prime minister had the flexibility to call the general election at a time of his choosing, up until 17 December 2024 – which is five years after parliament first met after the last general election.

The announcement came during a statement outside Downing Street after 1700 BST, where Sunak addressed recent challenges faced by the country.

He opened his speech by reflecting on the Covid-19 pandemic and the war in Ukraine, saying the events represented some of the most challenging times since World War II.

Sunak’s announcement came after consumer price inflation fell less than anticipated in April, in fresh data released earlier on Wednesday.

According to the Office for National Statistics, inflation dropped to 2.3% from 3.2% in March, reaching its lowest level since July 2021 but still above the expected 2.1%.

The reduction in inflation was largely attributed to lower gas and electricity prices following the energy price cap adjustment by Ofgem.

Despite that, services inflation remained high at 5.9%, slightly down from March but exceeding forecasts.

Core inflation, excluding energy and food, also remained elevated at 3.9%, above the predicted 3.6%.

  • REGULATORS FINE CITIGROUP AFTER £1.1BN OF EQUITIES SOLD IN ‘FAT-FINGER’ ERROR

Citigroup has been fined £61.6m by financial regulators after its internal systems failed to prevent a fat-fingered banker causing a flash crash by erroneously placing more than £1bn of orders.

The trader had intended to sell equities to the value of $58m (£46m) on 2 May 2022. However, the banker made an inputting error while entering the transaction into Citigroup’s order management system, so a giant equities basket of $444bn was created – and $1.4bn was then sold into the market.

According to the PRA statement

The banker had planned to enter 58m into the “notional” field of the Citigroup order system, which would have created a basket of equities worth that value in dollars. Instead, they entered 58m into the “quantity” field of the order system – creating a giant basket of 349 stocks with a total notional size of $444bn.

The Financial Conduct Authority (FCA) said it would fine Citigroup Global Markets £27.77m over the incident on 2 May 2022, which caused a flash crash in European stocks. The Prudential Regulation Authority (PRA) also imposed a financial penalty of £33.88m after its own investigation.

The Financial Conduct Authority (FCA) said “poor design” and “ineffective” real-time monitoring led to the incorrect sale of the shares across several European exchanges.

  • FCA FINES HSBC £6.2 MILLION OVER TREATMENT OF CUSTOMERS IN FINANCIAL DIFFICULTY

Between June 2017 and October 2018, HSBC failed to properly consider people’s circumstances when they had missed payments.

This meant it did not always do the right affordability assessments when entering arrangements with people to reduce or clear their arrears. Sometimes it took disproportionate action when people fell behind with payments, which risked people getting into greater financial difficulty.

The failings were caused by deficiencies in HSBC’s policies and procedures and the training of their staff, as well as inadequate measures to identify and address instances of unfair customer treatment.

In 2018, HSBC identified that there were issues with their handling of customers in financial difficulty and notified the FCA. HSBC invested £94 million in identifying the issues and putting them right. HSBC also issued redress payments totalling £185 million to over 1.5 million customers. 

Therese Chambers, Joint Executive Director of Enforcement and Market Oversight said: 

‘People must be able to trust their lenders to treat them fairly when in financial difficulty. By failing to do so, HSBC put 1.5 million people at risk of greater financial harm.

‘It deserves credit for identifying the issue and putting it right. The cost it has incurred in doing so, however, should be a warning to all lenders that they need to understand their customers’ circumstances so as not to make a bad situation worse.’

The FCA has taken HSBC’s remediation and redress programme into account when setting its fine. HSBC also agreed to settle the case and qualified for a 30% discount to the financial penalty imposed, which would otherwise have been £8,971,600. 

  • FTSE-100 HOUSEBUILDER PERSIMMON WEIGHS £1BN BID FOR RIVAL CALA

One of Britain’s biggest housebuilders is exploring a £1bn takeover bid for Cala Group, a rival player in the sector which has been put up for sale.

Sky News has learned that Persimmon, which has a market value of £4.74bn, is leaning towards submitting an offer for Cala ahead of a bid deadline this week.

City sources said it would be a strong contender to buy Cala, whose homes have a significantly higher average sale price than those of Persimmon.

Insiders expect Cala, which is being auctioned by Legal & General (L&G), to command a price tag of about £1bn.

If Persimmon is successful in the auction, it would mark the York-based company’s biggest acquisition for years.

Under Roger Devlin, its chairman, and chief executive Dean Finch, the company’s share price has rallied by over 20% in the last year.

In a trading update last month, Persimmon said it was on track to deliver growth in new home completions this year to up to 10,500.

The Cala auction comes amid a general election campaign in which new home provision is expected to figure prominently.

  • ONLINE CAR DEALER CAZOO COLLAPSES INTO ADMINISTRATION PUTTING 200 JOBS AT RISK

Cazoo a UK-based online car company, has gone into administration, leaving 200 employees unsure about their future.

Founded by serial entrepreneur Alex Chesterman, who also launched property marketplace Zoopla, Cazoo was once a UK unicorn, boasting a $8 billion valuation.

Now, just 6 years after its launch, the company has gone into administration.

Cazoo was propelled to success during the pandemic when people were largely shopping online. The company allowed people to buy, part-exchange, sell and finance vehicles online with the option to do everything from home – a very different model from traditional car dealerships.

Despite its initial success, Cazoo struggled financially. In 2023, multiple news outlets recorded that the company reported a loss of £700 million in the previous financial year. This led the company to streamline its operations, cutting 700 jobs, restructuring their leadership and abandoning global expansion efforts.

in March they changed its model from being a dealer, where it bought and sold cars itself, to a marketplace where consumers can buy and sell cars.

Teneo, the appointed administrator, is looking for people to buy Cazoo’s remaining assets, including its online marketplace. Despite trying to fight growing loans, the company just couldn’t keep up with the money needed, which led to the difficult decision by stakeholders to start selling off areas of the business.

  • NATWEST SHARE SALE PUT ON HOLD AS ELECTION CAMPAIGN DERAILS PLANS

A multibillion pound sale of NatWest shares has been kicked into the long grass due to the upcoming general election.

Jeremy Hunt unveiled plans last autumn to offer the public the chance to buy shares in the bank – with an advertising campaign to launch this summer.

But the Treasury has confirmed the sale of NatWest shares will now not go ahead because of election plans.

Mr Hunt wanted to sell off the Government’s remaining 38.6pc share of NatWest to put the Treasury in a healthier financial position ahead of the general election.

The City was anticipating for the sale to go ahead in June, with preparations in advanced stages. This has now been scuppered following Rishi Sunak’s snap general election announcement last week.

An offer of NatWest shares to the public would have formed part of the Government’s plans to eliminate its entire holding in the bank by 2026.

  • INFLATION RATE FALLS TO LOWEST IN ALMOST THREE YEARS

The rate of price rises has dropped to 2.3% in April – the lowest in nearly three years and closer to the Bank of England’s target, according to official data.

Inflation is at a low not seen since July 2021, the Office for National Statistics (ONS) said.

It’s a sharp drop from a month earlier, in the year up to March, the figure was 3.2%. Prices are still rising just at a slower pace than before.

But it’s higher than economists and the Bank of England had forecast. Economists polled by Reuters and the Bank were expecting 2.1%

It’s now closer to the 2% target set by the Bank of England and central banks across the world and may encourage the rate-setters to lower interest rates and make borrowing cheaper as a result.

The higher-than-expected inflation number could discourage a rate cut next month or in August as could a key figure for the Bank – core inflation.

  • TICKETMASTER OWNER LIVE NATION FACING MONOPOLY LAWSUIT

Promotion and ticketing company has faced scrutiny for years, particularly after it botched ticket sales to a much-anticipated Taylor Swift tour in 2022 prompted US politicians to look into the company’s dominance in the industry.

The US Justice Department (DOJ) is suing Live Nation, arguing the big concert promoter and its subsidiary, Ticketmaster, have been “monopolising” the live events industry.

In a groundbreaking antitrust lawsuit that threatens to upend the way concertgoers pay for tickets, the US government and dozens of states sued Live Nation, alleging that for years the parent company of Ticketmaster abused its industry dominance to harm fans nationwide.

The long-expected suit, filed in New York by the Justice Department and 30 state and district attorneys general, challenges the country’s biggest ticketing website and concert promoter, which regulators allege was the mastermind of a plan to stifle competition. The governments are seeking a jury trial and a breakup of the company.

If successful, the case could lead to sweeping changes in the market for live events.

The lawsuit says Live Nation directly manages more than 400 musical artists and controls around 60% of concert promotions at major venues.

It also owns or controls more than 265 concert venues in North America.

 

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