Yes I know we have had the next round of consultation papers from the RIP, sorry the FSA, fines on Goldman Sachs and investments in the Kent Reliance Building Society by wealthy overseas investors but the real news of the week is the return of Robbie to Take That. It only seemed like yesterday when the Port Vale fan left the group, in fact it was 15 years ago, and now he is back or back for good if you want to quote the back catalogue list.
On the financial front the heads of the UK’s five biggest banks faced a grilling on Thursday from George Osborne and Vince Cable in their first collective meeting since the coalition government took power two months ago. Stephen Hester and Eric Daniels, the chief executives of government-backed Royal Bank of Scotland and Lloyds Banking Group, were summoned to the Treasury, along with the most senior UK-based bankers at HSBC, Barclays and Standard Chartered. The aim was to thrash out some of the most politically sensitive issues in the banking world at a time of unprecedented regulatory reform and economic stress. Top of the agenda was lending to small businesses. The bosses of the high street banks also faced further pressure after a major inquiry into the retail banking sector was announced. The Commons Treasury Select Committee will investigate whether there is a lack of competition between Britain's lenders. The influential group of MPs will also debate whether free banking, where people do not pay charges to operate an account, still has a future. The inquiry will run alongside an independent Banking Commission announced last month chaired by Sir John Vickers, former head of the Office of Fair Trading.
Homeowners have continued to pay off their mortgages rather than take equity from their homes, according to the Bank of England. Around £3.2 billion was injected into housing equity during the first three months of the year. Despite being slightly down on the figure of £3.4 billion reported in the previous quarter, it is now two years since equity was last withdrawn from UK homes. A total of £38.3 billion has been injected by individuals into their properties in that time. With interest rates remaining low, concerns over debt and unemployment persisting, and house prices falling, people appear to have been choosing to repay their mortgages rather than release equity.
Estate agents had fewer inquiries from potential homebuyers last month while the supply of homes for sale showed signs of picking up, adding to fears that the housing market could be set for further price falls. The Royal Institution of Chartered Surveyors said that more agents reported falling inquiries about buying homes than saw an increase in June for only the second time since 2008, emphasising the drop off in interest in house purchases this year. On the positive side instructions to sell homes rose to a three year high, increasing supply just as the market is showing signs of a sustained weakening of demand. Banks' restrictive mortgage lending policies have contributed to a drop in the number of home sales being completed, according to the National Association of Estate Agents (NAEA). The association's market report for June showed that the average number of sales completed per branch dropped from eight in May to six in June. NAEA President Michael Jones said the uncertainty created by the emergency Budget had led to a hiatus in activity. "If the banks ease up on mortgage lending restrictions then with a bit of luck, the summer months will see the sales figure rise in line with demand," he added.
Pension funds around the world will be quoting the old saying "if the cap fits breath a sigh of relief" as BP finally stop the oil spilling out into the gulf. However executives at the company are still going through the cash in the attic to pay for the mounting compensation bill. A senior BP figure said the company could “easily” raise $20bn (€15.5bn) from disposals; twice its original target and achieving this figure would remove any need for the company to raise funds by issuing new equity.
And finally to save face Goldman Sachs has agreed to pay a lower-than-expected $550m fine to settle US regulators’ accusations that it misled investors in a mortgage-backed security – a move that ends the highest profile regulatory case since the crisis. Although the penalty is the biggest levied on a Wall Street bank, it amounts to around a week’s worth of trading revenues for Goldman and is below the $1bn fraud the Securities and Exchange Commission had alleged in its complaint in April. It originated when an investment product was put together which allowed investors to bet on the property market improving. However one of the advisors who put the deal together and chose many of the mortgages that went into the pot was betting on the market getting worse. The claim is Goldman Sachs should have disclosed interests whilst the counter claim was that a number of highly paid advisors acting on behalf of investors should have done their checks better - so both sides were felt to be culpable. Goldman also succeeded in persuading regulators to move the settlement away from civil fraud accusations to focus on its admission that the marketing materials for the collateralised debt obligation “contained incomplete information” which leads me to conclude that when something goes wrong, always blame the marketing people.
Feed provided by TheFinanceKey.co.uk