12th December 2022
Bite-sized business news from the UK and beyond
- Banking sector set for shake up
- Getir snaps up Gorillas
Banking sector set for shake up
On Friday the chancellor Jeremy Hunt announced a package of financial services reforms that he says will overhaul laws that “choke off growth.”
How did we get here?
During the 2008 Global Financial Crisis the UK government spent £137bn of taxpayer money bailing out the banking sector and banks Lehman Brothers and Northern Rock still collapsed. Following the crisis a suite of regulation was introduced to stop history repeating itself including the rule that protected everyday customers by separating their deposits from riskier investment banking divisions.
In the 14 years since, the UK has left the EU and London has lost its place as Europe's top share-trading centre. The government wants to improve London’s competitiveness and help the sluggish UK economy amid a cost of living crisis. The chancellor’s reforms cuts across dozens of areas including:
- The ring-fencing of retail banking from investment banking will be reviewed.
- There will be changes to how senior bank executives are hired, monitored and punished for poor management.
- Rules will be relaxed to make London a more attractive place to list for companies going from private to public.
The changes are in addition to the end of banker bonus caps announced by Hunt’s predecessor, Kwasi Kwarteng in September’s ill-fated mini-budget.
Yes but: There are concerns that the reforms could forget the lessons of the financial crisis. The Labour party says it will introduce “more risk and potentially more financial instability”.
Other stories to keep you in the loop
- Kwasi Kwarteng admits he and Truss 'blew it' and got 'carried away' with economic reforms
- Santander UK fined £108m over money laundering failings
- Twitter relaunches blue tick service with higher price for iPhone users
- Property asking prices fall almost £8,000 in December, says Rightmove
- Penguin Random House CEO to quit after merger blocked
- Monsoon to open new stores as fashion retailer enjoys high street Covid bounce-back
Getir snaps up Gorillas
On Friday, after months of rumours, grocery delivery app Getir confirmed it had bought rival Gorillas.
The market for quick grocery delivery ballooned during the pandemic
Analysts estimate the global grocery delivery market is worth a whopping $10tr. Istanbul based Getir and Berlin founded Gorillas are just two of the apps that have launched in the UK in the past two years. Other startups like Zapp and Jiffy alongside takeaway pioneers Ubereats and Deliveroo have all started to deliver shopping in under half an hour.
To deliver goods so quickly, these firms rely on hundreds of dark stores – small fulfilment centres based in local neighbourhoods – which means they need huge amounts of funding.
Delivery startups are loss making so smaller players are being acquired by larger, better funded rivals
Getir operates in nine countries and 81 cities across the UK, US and Europe. The company has been operating in the UK since last year and has expanded quickly, spreading to nine cities and buying rival Weezy.
But 2022 has been tough for the sector with fears of a consumer downturn
Gorillas and Getir have laid off hundreds of workers with Gorillas pulling out of Italy, Spain, Denmark and Belgium in a bid to save cash and get to profitability. The merger means a cut in valuation for both companies with Getir valued at $8.8bn – from a peak of $11.8bn - and Gorillas at $1.2bn – from a peak of $3bn.
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