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☆ Sentiment in UK finance falls at fastest pace since 2019 - survey
▼ + stars: | 2022-10-12 | by ( ) www.reuters.com time to read: +1 min

LONDON, Oct 13 (Reuters) - Britain needs to restore stability to its finances to help reverse the fastest drop in financial sector sentiment in three years, a survey by business body CBI and consultants PwC said on Thursday. Profitability growth in the sector remains robust and is expected to increase at a faster pace in October to December, the CBI/PwC survey said. But sentiment in the third quarter to September fell at its fastest pace since September 2019, when it was hit by uncertainty around Brexit negotiations, the survey said. Employment in the sector is set to decline at a quicker pace in the current quarter, perhaps a reflection of the weaker sentiment, while the value of souring bank loans is expected to increase modestly, the survey said. Register now for FREE unlimited access to Reuters.com RegisterReporting by Huw Jones Editing by Bernadette BaumOur Standards: The Thomson Reuters Trust Principles.

☆ Sentiment in UK finance falls at fastest pace since 2019, survey
▼ + stars: | 2022-10-12 | by ( ) www.reuters.com time to read: +1 min

☆ BoE's Pill: UK fiscal policy must not threaten credibility
▼ + stars: | 2022-10-12 | by ( William Schomberg | ) www.reuters.com time to read: +2 min

While bond yields have risen globally all year, the sharp slump came immediately after finance minister Kwasi Kwarteng's first fiscal statement, which lacked the usual independent forecasts and included 45 billion pounds ($49.7 billion) of unfunded tax cuts. "Ensuring that this shift - in concert with other fiscal policy actions - does not bring the longer-term sustainability of the public finances or respect for the wider institutional framework for macroeconomic policy into question remains key," he said. "Maintaining the credibility and integrity of that framework supports the effectiveness of monetary policy in pursuing its own objectives," he added in a speech text published by the BoE. "At present, I am still inclined to believe that a significant monetary policy response will be required to the significant macro and market news of the past few weeks," Pill said in a speech text published by the BoE. ($1 = 0.9048 pounds)Register now for FREE unlimited access to Reuters.com RegisterReporting by David Milliken; editing by William SchombergOur Standards: The Thomson Reuters Trust Principles.

☆ Morning Bid: The Next Three Days
▼ + stars: | 2022-10-12 | by ( ) www.reuters.com time to read: +3 min

Well, the Bank of England's Andrew Bailey has crowed, sort of making clear the Liz Truss government can't bank on it defending markets from the fallout of an ill-conceived economic revival plan for more than three days. "You've got three days left now. You've got to get this done," Bailey said on Tuesday, referring to the pension funds. Meanwhile, the U.S. dollar is up, yen is at 24-year lows, yields are soaring, sterling is wobbling and oil is slipping. That comes days after a sweeping set of export controls published by the Biden administration aimed at cutting China off from certain semiconductor chips made anywhere in the world with U.S. equipment.

☆ The Next Three Days
▼ + stars: | 2022-10-12 | by ( ) www.reuters.com time to read: +3 min

Well, the Bank of England's Andrew Bailey has crowed, sort of making clear the Liz Truss government can't bank on it defending markets from the fallout of an ill-conceived economic revival plan for more than three days. "You've got three days left now. Meanwhile, the U.S. dollar is up, yen is at 24-year lows, yields are soaring, sterling is wobbling and oil is slipping. Not all is lost for the chip industry that has been hammered in the past few days after a Reuters report on Tuesday that the U.S. government has allowed at least two non-Chinese chipmakers operating in China to receive restricted goods and services without their suppliers seeking licenses. That comes days after a sweeping set of export controls published by the Biden administration aimed at cutting China off from certain semiconductor chips made anywhere in the world with U.S. equipment.

☆ Sterling choppy as BoE sends mixed messages
▼ + stars: | 2022-10-12 | by ( Samuel Indyk | ) www.reuters.com time to read: +3 min

By 0746 GMT, the British pound was up 0.1% against the dollar to $1.0969, snapping five days of losses. Until the market gets that I think any Sterling rallies are ripe to be sold into," Brown added. "Further rises in Bank Rate are warranted," Lloyds Bank senior economist Hann-Ju Ho said in a note, even as he expects the economy to contract in the third quarter. Looking ahead, the BoE's Financial Policy Committee is scheduled to publish its latest financial policy summary and record at 0930 GMT. Meanwhile, BoE policy makers Jonathan Haskel (0800 GMT), Huw Pill (1135 GMT) and Catherine Mann (1700 GMT) are all scheduled to speak later in the day.

☆ Britain's bond market turmoil
▼ + stars: | 2022-10-12 | by ( ) www.reuters.com time to read: +3 min

The country's financial markets have been in turmoil since finance minister Kwasi Kwarteng last month unveiled tax cuts with no details of how they would be paid for. * The Bank of England has been forced into emergency bond-buying to stem a sharp sell-off in Britain's 2.1 trillion pound ($2.3 trillion) government bond market that threatens to wreak havoc in the pension industry and increase recession risks. * The BoE interventions have highlighted a growing segment of Britain's pensions sector - liability-driven investment. MAJOR PLAYERS* BoE governor Bailey said on Tuesday on the sidelines of an IMF meeting in Washington that BoE support for the pension funds would end as planned on Friday. MARKET REACTION* The 20- and 30-year UK government bond yields both hit their highest since 2002 at 5.195% and 5.1% respectively, passing above 5% for the first time since the BoE began buying bonds on Sept. 28 to calm the turmoil.

☆ Britain warns of tighter rules for crisis-hit LDI funds
▼ + stars: | 2022-10-12 | by ( Huw Jones | ) www.reuters.com time to read: +3 min

The FCA regulates asset managers who sell and run LDI strategies, while TPR regulates pension funds. The BoE oversees banks, some of which are part of the LDI chain. LDI is a popular product sold by asset managers to pension funds, using derivatives to help them match assets with liabilities so there is no risk of a shortfall in money to pay pensioners. Pension funds struggled to come up with higher collateral calls to back the derivatives used in the strategy, forcing the BoE to intervene in the gilts market. Given many LDI funds are listed in Dublin or Luxembourg, the European Union would also need to make reforms to implement such requirements.

☆ Morning Bid: Confusion reigns
▼ + stars: | 2022-10-12 | by ( ) www.reuters.com time to read: +4 min

Then BoE chief Andrew Bailey said late Tuesday: "You've got three days left now. You've got to get this done" - even as the Financial Times reported the central bank might extend the support. The tension built with Britain's economy looking set to go into recession as data showed it unexpectedly shrank in August. "The worst is yet to come, and for many people, 2023 will feel like a recession," said IMF chief economist Pierre-Olivier Gourinchas. * G20 finance ministers and central bankers meet at annual IMF/World Bank meeting in Washington* Bank of England Financial Policy Committee publishes summary of latest meeting.

Register now for FREE unlimited access to Reuters.com Register"We have announced that we will be out by the end of this week. "My message to the funds involved and all the firms involved managing those funds: You've got three days left now. Investors are nervous that Friday's halt to the BoE's bond-buying might come too soon for some pension funds. But a BoE spokesperson said it had been made "absolutely clear in contact with the banks at senior levels" that the Friday deadline would hold. On Wednesday, it said it was "closely monitoring" liability-driven investment (LDI) funds, which are key to pension funds, ahead of Friday's deadline.

☆ Regulators propose first global rules before 'crypto winter' thaw
▼ + stars: | 2022-10-11 | by ( Huw Jones | ) www.reuters.com time to read: +3 min

LONDON, Oct 11 (Reuters) - Cryptoasset companies should set aside capital like banks when undertaking similar activities, regulators proposed on Tuesday in their first global rules as a "crypto winter" wiped $2 trillion off the sector, leaving investors nursing losses. The Financial Stability Board (FSB), which coordinates financial rulemaking among Group of 20 Economies (G20), made nine recommendations for members to apply. Currently, the sector is largely unregulated in most countries, having to only comply with rules for safeguarding against money laundering and terrorist financing as regulators warn investors they risk losing every penny. "Concerns about the risks they pose to financial stability are therefore likely to come back to the fore sooner rather than later," Knot said in a letter to G20 finance ministers meeting in Washington this week. The proposals seek cross-border consistency to regulating crypto-assets, particularly as the European Union finalises groundbreaking rules to regulate the sector from 2024.

Mel Stride, a lawmaker who chairs the Treasury Committee in the lower house of parliament and had criticised Scholar's departure, said the appointment would help reassure investors. The moves came as Kwarteng prepared to head to Washington this week with International Monetary Fund criticisms of Britain's new policy direction ringing in his ears. British Chancellor of the Exchequer Kwasi Kwarteng speaks during Britain's Conservative Party's annual conference in Birmingham, Britain, October 3, 2022. Kwarteng said the new date for his medium-term fiscal statement would give the independent Office For Budget Responsibility (OBR) enough time to carry out a full forecast. The new date for the fiscal plan leaves Kwarteng and Truss with little more than two weeks to settle divisions in her cabinet over cuts to government spending.

☆ UK banks and insurers told to step up help for struggling customers
▼ + stars: | 2022-09-29 | by ( Huw Jones | ) www.reuters.com time to read: +2 min

LONDON, Sept 29 (Reuters) - Britain's Financial Conduct Authority (FCA) told banks and insurers on Thursday to do more to help customers struggling with a cost of living crisis as it investigates 40 banks for dragging their feet. Register now for FREE unlimited access to Reuters.com Register"We’ve told lenders that we expect them to support struggling customers, particularly as they have the data to spot the warning signs first," Mills told a City & Financial conference. "We have identified 30 firms that need to do more to help struggling customers and will investigate the activities of 40 more," Mills said. The FCA on Thursday wrote to heads of insurers, saying they should help to avoid policy cancellations or consider waiving policy cancellation fees. Over three million customers have fixed rate deals that are due to expire in the next two years, meaning they face a big hike in monthly payments.

LONDON, Sept 29 (Reuters) - HSBC will undertake a review of whether to keep its global headquarters in London's Canary Wharf financial district, according to a memo sent to staff and seen by Reuters on Thursday. The bank said it had decided to undertake a review "of the best future location in London" ahead of its lease expiring at the 45-floor tower at 8 Canada Square in early 2027. The bank said the review would include the option of staying and renovating the tower, adding it would keep its global headquarters in London. HSBC has occupied 8 Canada Square - which is one of the tallest buildings in Canary Wharf and bears the bank's name - since 2002. It has been home to up to around 8,000 HSBC employees, some of whom refer to it as the 'Tower of Doom'.

The FCA has been criticised by lawmakers and the crypto sector for being slow in processing licence applications and for rejecting swathes of applicants despite the UK government's push to make London a global crypto hub. "That is a benefit to the UK economy and UK financial service industry, and is good for competition, inward investment and growth." Crypto firms are scrutinised by the FCA for their ability to stop their operations being used for money laundering or financing terrorism. read moreMills said 95 people have been hired to the watchdog's authorisations team and the pending caseload has fallen by 40%. Mognetti said the European Union's new set of 'MiCA' rules for fully licensing crypto firms will put the EU at an advantage over Britain.

☆ Pension fund panic led to Bank of England's emergency intervention: Here's what you need to know
▼ + stars: | 2022-09-29 | by ( Elliot Smith | ) www.cnbc.com time to read: +7 min

A central narrative emerging from the U.K.'s precarious economic position is the apparent tension between a government loosening fiscal policy while the central bank tightens to try to contain sky-high inflation. Monetary policy is trying to mop-up after the milk was spilt," Turner said. Anything less, and there will likely be more turbulence for the gilt market, and the pound, in the coming weeks," he added. Following the Bank's bond market intervention, ING's economists expect a little more sterling stability, but noted that market conditions remain "febrile." She suggested the market would have benefitted from the government "blinking first" in the face of the market backlash to its policy agenda, rather than the central bank.

"Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability," the British central bank said. By 2:48pm (1348 GMT) it was trading down 0.5% at $1.0679, a fall of 12% in the last three months. The BoE said it would return to its plan to sell bonds and its launch was only postponed until the end of October. RESTORE ORDEROn Monday the BoE said it would not hesitate to raise interest rates and was monitoring markets "very closely". But the slide in bond prices continued unabated on Wednesday, prompting the BoE to make its move.

☆ UK's Kwarteng tells bankers: we are committed to fiscal discipline
▼ + stars: | 2022-09-28 | by ( ) www.reuters.com time to read: +1 min

LONDON, Sept 28 (Reuters) - British finance minister Kwasi Kwarteng told investment bank executives on Wednesday that the government was committed to fiscal discipline and that he was working closely with the Bank of England and budget forecasters. The statement made no reference to market turmoil or the Bank of England's surprise intervention in bond markets earlier on Wednesday. The Treasury said the meeting was part of a series of roundtables ahead of a planned financial services deregulatory package next month. "Ahead of the upcoming Big Bang 2.0 deregulatory moment for financial services, the Chancellor discussed potential sectoral reforms that are targeted at boosting growth, generating investment, and delivering higher wages across the UK. "The Chancellor reiterated his view that 'a strong UK economy has always depended on a strong financial services sector.'"

☆ Bank of England to buy 65 billion pounds of UK bonds to stem rout
▼ + stars: | 2022-09-28 | by ( David Milliken | ) www.reuters.com time to read: +4 min

Citing potential risks to UK financial stability, the BoE also said it would delay the start of a programme to sell down its 838 billion pounds ($891 billion) of government bond holdings, which had been due to begin next week. "Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability," the BoE said. "This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy." "There are schemes running out of cash at the moment," one pensions consultant said before the BoE intervention. The BoE's intervention reduced long-dated bond yields back to their level at the end of Friday - after the initial negative reaction to Kwarteng's statement - but shorter-dated yields were still higher.

☆ Breakingviews: BoE’s bond-buying U-turn is worth the risk
▼ + stars: | 2022-09-28 | by ( Neil Unmack | ) www.reuters.com time to read: +5 min

The fallout makes it even harder for Governor Andrew Bailey to convince markets he can tighten monetary policy. His decision on Wednesday to buy UK government debt and delay plans to sell down its 857 billion pound ($915 billion) bond portfolio carries big risks. Bailey’s goal is to cut holdings by 80 billion pounds over the next year. UBS analysts reckon issuance of gilts, after factoring in sales and redemptions from QT, will reach 355 billion pounds in the year ending March 2024. If Bailey can now tighten monetary policy without freaking out investors, his U-turn will have been worth the risk.

"Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability," the central bank said in a statement that immediately eased pressures on soaring British government bond yields. The Bank of England said on Monday it would not hesitate to raise interest rates and was monitoring markets "very closely". Earlier on Wednesday 30-year British government bond yields rose above 5% for the first time since 2002. "An irresponsible, destructive fiscal policy." In his remarks on Tuesday, BoE Chief Economist Pill said financial market upheaval would have a big impact on the economy and would be factored into the Bank's next forecasts.

☆ Wall Street keeps selling as world assets fail to recover
▼ + stars: | 2022-09-27 | by ( Lawrence Delevingne | ) www.reuters.com time to read: +5 min

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 27, 2022. The Bank of England said late on Monday it would not hesitate to change interest rates and was monitoring markets "very closely." U.S. stocks mostly faltered after a morning bounce, with the S&P 500 hitting a two-year intraday low. The MSCI world equity index (.MIWD00000PUS) reversed early gains on Tuesday, falling about 0.3% to a near two-year low early Tuesday afternoon. MSCI's broadest index of Asia shares outside Japan (.MIAPJ0000PUS) hit a fresh two-year low and was flat on the day.

☆ Bank of England says it won't take 'risky bets' to help City's competitiveness
▼ + stars: | 2022-09-27 | by ( Huw Jones | ) www.reuters.com time to read: +2 min

LONDON, Sept 27 (Reuters) - The Bank of England's new objective of helping the financial sector remain globally competitive should not encourage risky bets on regulatory standards to win business, BoE executive director Victoria Saporta said on Tuesday. Register now for FREE unlimited access to Reuters.com RegisterSaporta said the best way to maintain competitiveness is by having a regulatory regime that is open, predictable, transparent and aligned with international standards. Saporta said alignment with international standards makes it easier for international firms to conduct business in the UK. "Rhetoric" about Brexit dividends, deregulation and a Big Bang 2.0 means the City won't get access to the EU financial market in the forseeable future, Collier said. If we get it right, we should be a very vibrant and deep capital market," Collier said.

The Bank of England is seen, in London, Britain, September 26, 2022. REUTERS/Peter Nicholls/File PhotoLONDON, Sept 27 (Reuters) - The Bank of England is likely to deliver a "significant policy response" to finance minister Kwasi Kwarteng's huge tax cuts but it should wait until its next scheduled meeting in November before making its move, BoE Chief Economist Huw Pill said. "I do want to flag clearly at this point that in my view the combination of fiscal announcements that we've seen will act as a stimulus," Pill told the Barclays-CEPR International Monetary Policy Forum in London on Tuesday. Some investors and economists have said the British central bank should hold an emergency meeting now to deliver a big interest rate hike to prop up the value of the pound and avoid further inflation pressure. The pound was higher against the dollar on Tuesday, a day after hitting a record low.

☆ Plunging pound pauses as investors await policy response
▼ + stars: | 2022-09-27 | by ( Tom Westbrook | ) www.reuters.com time to read: +3 min

On Friday and again on Monday the pound plunged, finding a record low of $1.0327 as investors question Britain's economic gambit of unfunded tax cuts to spur growth. Sterling has dropped 5% since Thursday and 21% this year against a backdrop of an ever stronger dollar. As the pound fell on Monday, the dollar surged to new highs on the euro and many more. "Everyone's got this hope that the dollar is peaking and peaking and peaking, but it's just been far too premature," said Paul Mackel, global head of FX research at HSBC in Hong Kong. China's yuan also hit a 2-1/2 year low on Monday and was steady at 7.1639 on Tuesday.

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