Barclays fined; LV= sells to Bain; jobs data; Springfield upbeat – Dai…

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11.30am: Barclays fined

Barclays bank has been fined £26m by the Financial Conduct Authority for failures in its treatment of customers who fell into financial difficulties.

The FCA found that the bank had mistreated some retail and small business customers who fell into arrears between April 2014 and December 2018.

It failed to follow its customers’ contact policies or help customers understand their arrears, and offered unaffordable or unsustainable solutions.

The FCA acknowledged that Barclays has proactively redressed these customers and has paid £273m to at least 1.5m customer accounts since 2017.

The fine took the redress programme into account. Barclays agreed to settle the case and therefore qualified for a 30% discount on the penalty.

9am: London edges higher

The FTSE 100 reversed opening losses to trade 14 points higher at 6,546, helped by sterling easing to $1.3315 from US$1.3331 overnight.

The unemployment data (see below) may have been worrying, but the numbers were not as bad as feared, according to Howard Archer, the chief economic advisor to the EY ITEM Club.

8.30am: Decline in SME activity

The latest NatWest (RBS) UK Small Business PMI survey shows a decline in small firms’ business activity for the second month running in November, as overall demand conditions remained weak.

However, news of a vaccine boosted small business confidence to a ten-month high.

7.45am: Lord Sugar’s brother dies

Lord Sugar’s brother has died of coronavirus, the the Amstrad-founder has announced.

The Amstrad founder, best known as host of the TV show The Apprentice, tweeted: “Today I lost my long suffering brother Derek another victim of Covid which added to his underlying health issues.”

7.30am: LV= agrees takeover of assets

LV= has agreed that Bain Capital, a global private investment firm, will pay £530m to acquire its savings & retirement and protection businesses, representing a multiple of 0.9x for the Solvency II Own Funds  of £606m as at September 2020 and a multiple of 1.05x for Economic Own Funds of £506m.

Under the proposal LV=’s with-profits business will be ring-fenced in a separate fund and closed to new business. 

The capital available for distribution is expected to increase by up to 40% as a result of the transaction and will be used to increase payments to With-profits members as their policies mature. Their long-term interests will continue to be protected by an experienced With-profits Committee.

The acquisition is expected to complete by the end of 2021.

Alan Cook, chairman of LV=, commented : “As a newly standalone life and pensions business in an increasingly competitive market, the board recognised that LV= required significant long-term investment to be sustainable. This transaction is the culmination of an extremely thorough and robust strategic review – followed by a structured sale process to secure the best long-term future for our members, employees, other stakeholders and the business.

“The board is delighted to have secured an attractive price and unanimously agreed that the transaction with Bain Capital presents an excellent financial outcome for all our members, as well as offering an unrivalled commitment to LV=’s future prospects, business and people. We look forward to engaging fully with our members in advance of a member vote in the first half of 2021.”

Scottish unemployment falls

For the period August to October, Scotland’s employment rate estimate has risen to 74.8% and the unemployment rate estimate has fallen over the quarter to 4.2%, the biggest fall of any UK region or nation.

Across the UK redundancies rose to a record high of 370,000. The unemployment rate rose from 4.8% to to 4.9%, the Office for National Statistics said.

See below: Fraser of Allander comments on economic outlook

7am: Springfield rebounds

Build and sales activity at Springfield Properties rebounded strongly following the resumption of operations, post lockdown, from late June, with the group delivering against a substantial backlog and experiencing high levels of demand.

As a result, it expects total revenue for the first half of 2020/21 to be about 17% higher than in H1 2019/20, in line with market expectations.

The group also expects to report a material reduction in net debt to about £33.6m at 30 November 2020 from £68.8m at 31 May 2020.

Elgin-based Springfield will announce interim results in February.

Innes Smith, CEO (pictured), said: “This has been a strong six months for Springfield. We were able to safely and efficiently resume construction to complete the homes that had been scheduled for handover at the end of the previous financial year.

“With a strong order book for our private and affordable housing, with substantial visibility, we look forward to delivering significant growth for the full year in line with market expectations.”

5am: Slow recovery for economy

Scotland‘s economy may take three years to return to pre-pandemic levels, according to the Fraser of Allander Institute.

Its central scenario predicts a return to “normality” by August 2022, while the most optimistic prediction suggests February 2022 based on a successful vaccine programme.

But under a pessimistic scenario the Scottish economy would not recover to its former level until September 2023.

Whatever outcome emerges, unemployment is expected to rise to 7.5% by the second quarter of next year – double the current rate – as the furlough scheme is rolled back.

“With unemployment soon to rise and a renewed squeeze on wages across the public and private sector, it will feel like Scotland is in a recession for some time yet,” said the institute, based at Strathclyde University.

The forecast is in line with predictions for other economies. Japan will suffer a smaller contraction this year than initially forecast but won’t return to pre-coronavirus pandemic levels until at least early 2022, economists in a Reuters poll said.

The world’s third-largest economy is expected to shrink 5.3% in the current fiscal year ending in March.

Analysts expected the economy to rebound 3.4% next fiscal year, unchanged from the November survey, but a recent resurgence in coronavirus cases could slow the recovery.

Oil price falls

Oil prices fell as tighter lockdowns across Europe threatened to squeeze demand and slow the recovery.

US West Texas Intermediate crude futures fell 36 cents, or 0.8%, to $46.63 a barrel at 0506 GMT, while Brent crude futures fell 40 cents, or 0.8%, to $49.89 a barrel, erasing Monday’s gains.

Equities

The FTSE 100 is set to extend its losses into a third day as news of a new strain of the coronavirus emerging in the country offsets fresh optimism about a Brexit deal.

London’s blue chip index was being called 24 points lower ahead of today’s open, after closing almost 15 points or 0.2% lower at 6,531.83 the day before, although the mid-cap FTSE 250 finished 0.7% higher.

On Wall Street the Dow Jones Industrial Average and S&P 500 both fell, 0.62% and 0.44% respectively, although the Nasdaq rose 0,5% because tech firms benefit from people being forced to stay at home.

Asia fared no better, with Tokyo, Hong Kong, Shanghai, Sydney, Seoul and Singapore leading losses across the region, even though China’s economy continued to improve last month, with industrial production and retail sales figures rising 7% and 5% YoY respectively, in line with expectations.