Bank of England removes restrictions on bank payouts

The Bank of England has removed restrictions on bank dividends and share buybacks imposed during the pandemic, judging the sector to be resilient enough to absorb any further Covid-19 shocks while lending to support the economic recovery.

“Extraordinary guardrails on shareholder distributions are no longer necessary”, the BoE said in its latest financial stability report. Results of recent stress tests and lower-than-expected levels of loan losses indicate “the banking sector remains resilient” and “has the capacity to continue to provide that support,” the central bank said.

The BoE’s decision follows those of the US Federal Reserve and the European Central Bank, which both relaxed their shareholder payout limits earlier in the year.

Briefly

Howden Joinery said first half trading beat its expectations with group revenue of nearly £785m, up around 20 per cent on 2019. “Since the period end, this pattern of trade has continued and we remain cautiously optimistic in our outlook for the second half and our all-important peak trading period,” the builders’ merchant said. “Accordingly, we are currently expecting pre-tax profits of around £300m for 2021 as a whole.”

Smiths News, the newspaper distributor, said trading in its year ending August is expected to be ahead of market expectations. Core sales of newspapers and magazines have continued to stabilise while Euro 2020 has delivered a one-off benefit to sticker and album sales, it said.

Hotel Chocolat said underlying pre-tax profit will be higher than its previous expectations. UK store performance since the reopening in April has been encouraging, with strong trading in smaller cities and market towns has largely offset lower footfall in commuter and tourist locations, said the retailer. Revenue for the full year ended June rose 21 per cent year on year to £165m, it said in a trading update.

Phoenix has agreed to sell Ark Life Assurance to fellow insurer Irish Life for a total cash consideration of €230m cash. “This transaction simplifies our European operations and accelerates the cash release from this business,” Phoenix said. “The group expects to redeploy the capital into higher return growth opportunities to drive incremental future cash generation.”

British Land said it had collected 85 per cent of its June 2021 rent roll, split between offices at 99 per cent and retail property at 71 per cent. “With lockdown restrictions lifting, we have seen a notable improvement in activity across our markets and our business is performing well,” said Simon Carter, chief executive.

Halfords revealed it has entered the software market with the launch of Avayler, a business-to-business services management platform developed in-house to manage Halfords’ own garages, mobile vans and retail stores. Avayler’s first customer is American Tire Distributors, it said.

Redde Northgate, the van hire and courtesy car services group, said it had completed the acquisition of UK electric vehicle charging equipment installer ChargedEV on undisclosed terms.

Construction group Kier said in a trading update that full-year results will be “moderately ahead” of the board’s expectations. It cited a strong operational performance in combination with cost savings.

Revolution Beauty will join London’s Aim today with a valuation of £495m. The cosmetics supplier raised £110.7m gross of new money as well as £189.3m for existing shareholders with a placing at 160p per share.

Omega Diagnostics posted a £2.2m ebitda loss for the year ended March on revenue down 11 per cent to £8.75m. The Aim-quoted medical diagnostics company said a government selection process for Covid-19 antibody testing kits was taking longer than originally expected. 

David Cameron was paid more than $1m a year for his part-time advisory role at Greensill Capital.

The sale of new diesel trucks will be banned from 2040 under the government’s transport decarbonisation plan. EU emissions rules set to come into force as soon as 2025 are likely to make petrol cars less profitable than electric models, according to a senior Volkswagen executive.

Beyond the Square Mile

European Central Bank unity on its inflation target could dissolve into division as early as next week when policymakers meet to discuss changing its guidance on raising interest rates, its president Christine Lagarde has warned.

The ECB could take steps to ensure that lenders avoid paying excessive dividends later this year, when it will “most likely” lift a cap on payouts, supervisory board member Margarita Delgado told Bloomberg.

Elon Musk defended Tesla’s takeover of SolarCity and ripped into a lawyer for the shareholders suing over the deal on the first day of a trial that could saddle the electric carmaker’s chief executive with a huge compensation bill if he loses.

Financial benchmarking giant MSCI is working on an “ultimate index” tracking the performance of all markets, which could mark the culmination of half a century of academic theory and practical financial engineering.

Essential comment before you go

Helen Thomas
A plan by the Rothermeres to take Daily Mail owner DMGT private seems a natural step after recent business sales. The market isn’t likely to appreciate an increasingly subscale, low-growth conglomerate of old media assets, and there is no other buyer here.

Lex
Tate & Lyle’s deal to sell a controlling stake in its bulk sweeteners division is a creative carve out rather than a typical buyout firm slash and burn. The ingredients maker can maintain some connection with its primary products unit while de-consolidating it.