FirstFT: Bank chiefs summoned to address ‘profiteering’

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The UK’s financial watchdog has summoned bank chief executives to address concerns that savings rates are lagging behind the surging cost of mortgages.

Top bankers at HSBC, NatWest, Lloyds and Barclays are expected to attend a meeting at the Financial Conduct Authority on Thursday amid accusations they are profiteering from rising interest rates, according to people familiar with the matter.

The FCA and the executives are planning to discuss the pricing of cash savings and how banks communicate with their customers on rates. The meeting could result in a “savings charter”, or set of commitments, the people said.

Last month, the Bank of England raised rates to 5 per cent, its 13th consecutive rise in a protracted battle with high inflation. While the average rate on a two-year fixed-rate mortgage has leapt to 6.42 per cent, according to Moneyfacts, the average rate on an easy-access savings account is only 2.43 per cent, with many large banks offering much lower levels.

Here’s what else I’m keeping tabs on today:

UK politics: Prime Minister Rishi Sunak answers questions from parliament’s liaison committee, which scrutinises the government’s effectiveness, while the Local Government Association’s annual conference starts in Bournemouth.

Economic data: Spain releases June unemployment figures.

Results: Irish housebuilder Cairn Homes has its first-half trading update and supermarket chain Sainsbury’s issues its first-quarter trading statement.

Independence Day: US financial markets are closed for the holiday.

Five more top stories

1. Swiss authorities are probing a Geneva-based oil trader’s legal arrangements to sidestep Russia sanctions. The regulatory questions to Paramount Energy & Commodities SA are one of the first known efforts by a European authority to investigate compliance with the western sanctions regime on Russian oil.

2. Billionaire hedge fund manager Chris Rokos has reached a settlement with Deloitte over claims he received bad advice on a failed investment scheme that left him with a £40mn tax bill. Rokos had sued the Big Four firm in London’s High Court, alleging Deloitte was in breach of its duties when it advised him on an enterprise zone investment in north-east England.

3. European and Chinese energy groups are racing to lock in shipments of liquefied natural gas from the US, as European demand for LNG has risen sharply since the war in Ukraine began. The growing number of long-term contracts is set to help the US expand export infrastructure and bring LNG supply online in the next two to three years.

4. A top Hollywood talent agency aims to tap into the football market, with plans for new acquisitions after expanding its office in London. “Streaming has really globalised the business,” United Talent Agency chief Jeremy Zimmer told the Financial Times. “In the rest of Europe, going into Asia and into Africa, there’s so much happening in terms of culture, media, fashion, music, sports.” Read more about UTA’s expansion plans.

5. Incumbent Macky Sall will not run for a third term in Senegal’s presidential election next year, he said, ending months of speculation. Critics said a move by the 61-year-old to seek another term would have threatened the integrity of the west African nation’s constitution, which limits presidents to two terms.

The Big Read

Officials representing the world’s 20 largest economies have increased rates by an average of 3.5 percentage points since they began tightening borrowing costs. While headline consumer indices have fallen, central bankers cite higher core inflation, tight labour markets and pressures in the services sector as evidence that prices will continue to soar for some time. What explains inflation’s persistence in the face of aggressive rate rises?

We’re also reading . . .

Chart of the day

Venture capital funding for plant-based meat start-ups has slumped to its lowest level since 2018, as a weaker economic outlook and rising interest rates curb enthusiasm for the once high-flying industry. Investors have not given up the sector altogether, however. While funding for plant-based alternatives has fallen, investors have backed start-ups developing lab-grown and fermented protein alternatives.

Take a break from the news

Is cider the next champagne? Ted Dwane, the bassist in the Grammy award-winning band Mumford & Sons, is leading the charge as a new breed of artisan cider makers combines traditional methods with a fan’s fervour. “It’s an obsession that takes you over,” Dwayne says.

Additional contributions by Benjamin Wilhelm