Market News

(Bloomberg) -- Britain’s top lenders got a clean bill of health in the Bank of England’s latest stress test, with no firm being required to strengthen its capital position. In its financial stability report, which also dropped this morning, the BOE acknowledged the risks borrowers are facing from higher mortgage rates, but said banks are strong enough to deal with it.

Here’s the key business news from London this morning:

In The City

UK Banks: The Bank of England said the UK’s eight largest lenders all passed its latest stress test, which examined their resilience to a severe economic downturn.

• The firms would have enough capital to continue lending through a shock to the economy including a housing market crash, surging unemployment and interest rates as high as 6>#/li###
• The lenders tested were Barclays Plc, HSBC Holdings Plc, Lloyds Banking Group Plc, Nationwide Building Society, NatWest Group Plc, Banco Santander SA’s British arm, Standard Chartered Plc and Virgin Money UK Plc

PageGroup Plc: The recruitment consulting firm reported a 6.5% drop in second-quarter gross profit at constant currencies compared to the same period a year ago, citing “tough market conditions” in the UK, US and Asia.

• The company continued to see lower levels of candidate and client confidence, resulting in delays in decision-making and candidates being more reluctant to accept offers, it said
• Still, temporary recruitment outperformed permanent as clients are seeking more flexible options

Ryanair Holdings Plc: The discount carrier resigned from an UK effort to bolster the country’s aviation sector after five months, saying the industry-government panel had become a “talking shop” that failed to make progress on key priorities such as air-space modernisation and border control.

In Westminster

Rishi Sunak said the fight against inflation trumps the need to cut UK taxes, signalling British voters are unlikely to benefit from a sizable pre-election giveaway. 

Polluters like Thames Water that befoul UK rivers and seas will face unlimited penalties and tougher sanctions, according to new government legislation announced today.

In Case You Missed It 

BT Group Plc Chief Executive Officer Philip Jansen is leaving, capping four years of tangling with rivals, staff and an inexorable slide in the phone company’s share price.

London merchant bank Close Brothers Group Plc is exploring options for its wealth-management arm, including a potential sale, people familiar with the matter told Bloomberg. Wealth management has been a crucial pillar of revenues for banks, which see value in the steadier customer base and lower capital requirements than other areas such as trading securities. Many smaller players, though, are seeking economies of scale in tie-ups with larger rivals.

Finally, even London’s wealthiest homebuyers are shying away from deals as a cocktail of pricier borrowing and political uncertainty spooks the capital’s real estate market.

Looking Ahead 

Fresh GDP data are due tomorrow at 7 a.m. Bloomberg economists expect the UK economy to have contracted in May as the coronation holiday dragged on activity.

On the corporate front, we’ll get updates from companies including consumer credit reporting firm Experian Plc and Barratt Developments Plc, Britain’s biggest homebuilder by volume.

Barratt saw headwinds to home reservations return last month against the backdrop of higher mortgage rates. Its balance-sheet strength may prove key again, Bloomberg Intelligence analysts said, noting the company’s robust finances allowed it to endure a 30% volume drop at the beginning of the Covid-19 pandemic.

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