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- Today's business and finance round up 21st February 2022
Today's business and finance round up 21st February 2022
💰Natwest back in black, pays gov £1.7bn
21st February 2022
Bite-sized business news from the UK and beyond
Good morning After Dudley and Eunice, Franklin is the next storm set to hit the UK in the space of one week. To find out why and how storms are named, and even submit a name of your own, check out this Met Office guide.
Natwest back in black, pays gov £1.7bn
Major data leak at Swiss banking giant
BANKINGNatwest back in black, pays gov £1.7bn
What’s going on?Natwest swung back into profit last year, boosted by recovering consumer spending post lockdown. The state-owned bank posted profits of £4bn in the 12 months to December 2021 after making a £351m loss the year before. It also announced a dividend of £3.8bn with the government receiving £1.7bn.
Why is this important?
The performance of high street banks is seen as a read across for the UK economy’s health.During 2020 banks were cautious about lending as lockdown saw many industries grind to a halt. Banks also set aside billions of pounds to cover potential loan losses from suffering businesses and individuals.But things turned out better than expected and last year banks were able to release the cash they had set aside for bad loans. Natwest’s return to profitability has been helped by a resurgence in consumer confidence as households deplete their lockdown savings and return to spending. The booming housing market has also led to strong demand for mortgages.The bank, formerly Royal Bank of Scotland, received a £50bn bail out in 2008 during the Global Financial Crisis when the government took a 84% stake.Over the past 14 years the taxpayer has slowly been recouping its cash and Natwest is now 51% state owned with the chancellor planning to sell down even more in the coming months.
This week will see earnings reports from other major lenders including Barclays and Lloyds. Their performance is expected to be strong like Natwest, with profits driven by the rebound in the economy post Covid restrictions.But, as is the case with any company these days, rising interest rates and inflation are likely to impact future trading. Squeezed consumer budgets and rising borrowing rates could dampen demand for loans this year.
BANKINGMajor data leak at Swiss banking giant
For generations Switzerland has been renowned for its highly secretive banking sector where the rich and powerful are able to hide their wealth. But over the weekend that secrecy was breached when details of 30,000 clients of Credit Suisse, Switzerland’s second-biggest bank, revealed some unpleasant details and suggested that the bank may have failed to do proper checks on many customers.A whistleblower gave the information to German newspaper Süddeutsche Zeitung and over 100 journalists have spent months analysing the data.Credit Suisse said in a statement that it “strongly rejects the allegations and insinuations about the bank’s purported business practices”.Having a Swiss bank account isn’t illegal but banks are supposed to avoid clients whose cash has come from criminal activity. Investigations by the media suggested they have evidence that Credit Suisse accounts had been used by clients involved in serious crimes such as torture, corruption, money laundering or drug trafficking. The data covers accounts opened from the 1940s until well into the last decade, that hold over $100bn.Credit Suisse pointed out it had taken "significant additional measures over the last decade, including considerable further investments in combating financial crime".The news comes just weeks after the bank’s CEO left after he broke Covid regulations in another scandal.
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