BUSINESS LIVE: Barclays to buy Tesco Bank; Bellway completions to slump 31%; Howden’s £1.1bn war chest

A High Court judge has given the green light to a redress scheme worth up to £230million for the hundreds of thousands of investors burned by the collapse of the Woodford Equity Income fund in 2019.

The GAP insurance market has seen its biggest-ever shake-up, with 80 per cent of deals pulled from sale after the regulator stepped in.

The Financial Conduct Authority (FCA) today said that several insurance firms have agreed to pause selling GAP insurance, formally known as ‘Guaranteed Asset Protection’.

Bellway has noted ‘encouraging levels’ of consumer enquiries and higher booking volumes in recent months as mortgage rates continue to moderate.

The Newcastle-based housebuilder saw weekly private reservation rates rise to 0.59 per outlet last month, compared to 0.45 in January 2023, when the property sector was experiencing significantly more volatility.

Is AIM-listed microchip minnow Sondrel coming to a brain implant near you?

That’s the rumour that spread across the media this week, after the Daily Mail, quoting ‘a source with knowledge of the matter’, revealed that Sondrel played a key part in developing Tesla boss Elon Musk’s brain–computer interface Neuralink.

Deciding on where to put your money at the moment isn’t easy.

The stock market is erratic, property prices have fallen in many areas and inflation has decimated people’s savings for more than two years.

Rain Newton-Smith, who has been struggling to rebuild the CBI’s reputation after a sex scandal last year, said the Government should avoid ‘pre-election giveaways’.

HM Revenue & Customs has admitted that its customer service levels for taxpayers using the telephone or post to reach it remain ‘below [its] service standards.’

HMRC said an increase in the number of taxpayers, and a higher proportion of people with complicated queries, had affected its post and telephone services.

Barclays is acquiring the bulk of Tesco Bank’s retail banking business for £600million.

The banking giant plans to take over Tesco Bank’s credit cards, unsecured personal loans and deposits, and market them under a strategic partnership with Tesco Stores for at least a decade.

Tesco will hold onto its insurance, ATM, gift cards and travel money operations, which it said are ‘capital-light, profitable businesses with a strong connection to our core retail offer’.

Two of the biggest paper and packaging firms listed in London are the latest to be swept up by takeover fever.

Just a day after housebuilders Barratt Developments and Redrow outlined plans to merge, FTSE 100 group DS Smith revealed it ‘received a highly preliminary expression of interest’ from blue-chip rival Mondi though no proposal has been made.

British housebuilders have suffered in the past year in challenging market conditions, but the tide may finally be turning for the sector.

New home completions, profits and share prices have slumped across much of the industry, as a tough comparison with two strong prior years is compounded by a frail British consumer.

French luxury group Kering has vowed to pour more money into Gucci to revive its star label after another slump in sales.

As clouds hang over the industry, it said revenues in the three months to the end of December were 6 per cent lower than a year earlier, at £4.2billion.

Howden, one of the world’s largest privately owned insurance brokers, has readied a £1.1billion war chest to finance its growth ambitions, according to Reuters.

its plans include acquisitions and the group has had interest from potential new shareholders to back a large deal if needed, its management told the news agency.

The British group this week reported a 30 per cent jump in core earnings to £780million in the year to 30 September 30, partly driven by acquisitions. It also raised $6.1 billion in debt to refinance existing borrowings and raise cash.

After the refinancing, Howden has £1.1billion of cash on its balance sheet to spend on deals, hires and buying out employee shareholders, CFO Mark Craig said.

The value of Aim-listed Sondrel more than doubled following reports it played a key part in Elon Musk’s Neuralink brain chip.

Shares in the Berkshire firm soared 105.9 per cent, or 6.3p, to 12.25p, adding over £5million to its £5million market cap, after Mail Online revealed Sondrel assisted with semiconductor technology that allows Neuralink’s implants to function.

Oli Creasey, property research analyst at Quilter Cheviot:

‘Of some concern for investors will be that during this six month period, Bellway has spent two-thirds of its cash reserves, with the cash on balance sheet reducing from £232m to just £77m.

‘This appears to be a result of increased payments to land creditors (mostly representing contracts signed in the past two years), but the future land obligations have reduced significantly, and net gearing (which includes the impact of future land payments) remains low at c. 5%.

‘While we expect management will want to rebuild this cash buffer over future periods, the reduction isn’t as alarming as the headline reduction suggests.’

Bellway cheered easing affordability concerns and improved booking rates in the first half of its fiscal year, buoyed by recent cuts in home-loan rates.

The British housing market has seen signs of stability in recent weeks helped by easing mortgage rates, after battling subdued demand for most of last year, while builders have stayed cautious amid macro-economic worries and lack of clarity over the Bank of England’s monetary policy path.

Reflecting the green shoots of recovery in the sector, UK house prices rose more than expected in January, while British lenders in December approved the most number of mortgages since June.

‘While the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates through the first half has eased affordability constraints,’ CEO Jason Honeyman said in a statement.

Bellway expects to complete 7,500 homes this year, down more than 30 per cent from the 10,945 built in the year to 31 July 2023.

Disney hopes to cash in on Taylor Swift mania to boost its subscription service.

It has bought exclusive streaming rights to the pop superstar’s Eras Tour concert film.

Barclays is set to buy Tesco’s retail banking operations in a deal worth up to £700million, kickstarting a 10-year ‘exclusive strategic partnership’ that will see the lender market and distribute credit cards, unsecured personal loans and deposits using the Tesco brand.

Barclays boss C.S. Venkatakrishnan said: ‘This strategic relationship with the UK’s largest retailer will help create new distribution channels for our unsecured lending and deposit businesses.

‘We are able to bring our expertise in partnership cards developed over decades in the US to enhance further the highly successful Tesco Clubcard loyalty scheme.

‘Similar to our acquisition of Kensington Mortgages last year, this partnership with Tesco is a further demonstration of the investment we continue to make in our UK consumer business.

‘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.’