[ad_1]
London’s long-awaited run of dealmaking action continued today when Tesco unveiled the sale of its banking operations to Barclays.
This week has already seen a proposed tie-up between Barratt Developments and Redrow and DS Smith disclose takeover interest from packaging rival Mondi.
In the latest sign of an upturn in confidence in the housebuilding industry, Bellway today reported an improvement in reservations so far this year.
FTSE 100 Live Friday
-
Tesco sells banking arm to Barclays
-
Bellway eyes house market recovery
-
Arm Holdings soars in value
Bellway points to signs of spring in the housing market as mortgage rates fall
07:35 , Michael Hunter
There are signs of a rebound in the housing market as the mortgage rates on offer from lenders start to come down, according to an update today from Bellway.
The developer said there were “encouraging levels of customer enquiries in the traditionally quieter winter trading period”, lifting private reservation rates.
Overall in the six months to the end of January, housing revenue fell to £1.25 billion, down from £1.8 billion year-on-year. The number of completions fell, to 4,092 homes from 5,695.
And the average selling price also dropped, to £309,300 from £316,929.
The FTSE 250 company said it had opened 34 new outlets in the period “building on the recent recovery in customer demand” and has plans to open over 40 more in the second half of the year.
Jason Honeyman, group CEO, said: “While the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates through the first half has eased affordability constraints and we are encouraged by the seasonal pick-up in customer leads and an improvement in reservations since the start of the new calendar year.
Tesco sells banking arm to Barclays for £600m
07:23 , Simon English
Tesco today agreed what it called a “long-term strategic partnership” with Barclays to provide banking services to its millions of customers.
The supermarket first moved into banking in July 1997, a move aped by other grocers. It was then a 50:50 joint venture with Royal Bank of Scotland.
Supermarkets thought their close relationship with their customers would enable them to sell insurance and other banking products alongside food.
In most cases, the plans did not take off as expected.
A few weeks ago Sainsbury said its banking arm was up for sale as it instead goes for a “food first” strategy. It first launched into banking nearly 30 years ago. It had already sold its mortgage book to Co-op Bank last August.
Barclays will take on 2800 staff from Tesco Bank, paying around £600 million for its customers deposit and loan arm. Barclays said the deal is a “further demonstration of the investment we continue to make in our UK consumer business”.
Chief executive C.S. Venkatakrishnan added: “We are looking forward to working closely with the team at Tesco over the coming months to enable a smooth transition and, subject to completion of the transaction, we look forward to welcoming Tesco Bank colleagues and customers to Barclays.”
And Tesco boss Ken Murphy said the tie up will offer “greater value for customers and for our business”.
The value of the deal could rise over time.
Arm shares surge and S&P 500 breaks 5000, FTSE 100 seen higher
07:22 , Graeme Evans
Shares in Arm Holdings closed 48% higher last night, valuing the Cambridge-based chip designer at $116.76 billion (£92.5 billion) after results the previous evening smashed Wall Street expectations.
Arm’s shares have more than doubled since they began trading on Nasdaq in September, fuelled by demand from customers needing chips to power AI technology.
The strong performance, which means Arm is now worth more than FTSE 100-listed BP, GSK and Rio Tinto, came during an otherwise lacklustre session on Wall Street.
The S&P 500 index closed 2.85 points higher at 4997.91, having briefly gone above the 5000 threshold for the first time. The Dow Jones Industrial Average and Nasdaq Composite both registered modest gains.
A negative reaction to AstraZeneca results contributed to London’s underperformance in yesterday’s session, with the drugs giant down 6% and the FTSE 100 off 33.27 points to 7595.48. IG index expects the top flight to open today’s session 0.2% higher.
Tesco sells banking arm to Barclays
07:11 , Daniel O’Boyle
Tesco has agreed to sell its banking arm to Barclays for about £1 billion, weeks after rival Sainsbury’s announced its exit from banking.
Tesco said the deal removed £7.7 billion worth of “capital-intensive assets” and £6.7bn of financial liabilities from its balance sheet.
It will get an initial £600 million, plus £100m after the settlement of certain regulatory capital amounts and after transaction costs, and a special dividend of £250 million.
Ken Murphy, Tesco chief executive, said: “Tesco Bank is a strong business that has helped millions of loyal customers to manage their money for more than 25 years.
“As we look to the future, our aim is to be the best provider of financial services in the UK, with this strategic transaction and partnership with Barclays unlocking greater value for customers and for our business. By working with one of the UK’s leading banks, we can bring customers new and innovative propositions, which will continue to benefit from Tesco Clubcard’s unique insight and digital capabilities.”
C.S. Venkatakrishnan, Barclays chief executive, said: “Barclays is a leading consumer bank in the UK. This strategic relationship with the UK’s largest retailer will help create new distribution channels for our unsecured lending and deposit businesses.”
Recap: Yesterday’s top stories
06:48 , Simon Hunt
Good morning from the Standard City desk.
Along with unemployment, home repossession is probably the most distressing symptom of recession.
We still do not know if the country was officially in recession at the back end of last year — for that we have to wait for the puff of white smoke from the ONS next week.
But the scourge of repossession is almost certain to rise, with London worst affected, whatever the GDP number crunchers come up with. According to government figures published today, banks and building societies initiated 4,384 mortgage possession claims in the last quarter of 2023.
That is up 39% on the same period in 2022.
It takes about a year for the process to play out, from a claim being lodged with the county court, to owners having to hand the keys over the bailiffs. So legal proceedings started last autumn will not result in people being turfed out for many months yet.
We are not yet back at the levels of claims seen before the pandemic, let alone after the financial crisis, or God forbid, during the Nineties property crash. But they are steadily rising — and London is on the front-line.
There has been so much talk of rate cuts that you have to remind yourself sometimes that the Bank of England continues to stay its hand at 5.25%.
Today’s figures show that for increasing numbers of people that is too much of a burden to bear.
Here’s a summary of our other top stories from yesterday:
[ad_2]