News round-up: Brexit and banks, local government borrowing, New Homes Bonus, Axa’s tobacco divestment,
0Banks ‘could suffer under Brexit’
Funding costs for UK banks would increase if the UK votes ‘leave’ in the European referendum next month, according to ratings agency Fitch. In an analysis released this week, it said this could make it harder and more expensive for some larger banks to build up loss-absorbing debt buffers needed for resolution requirements. But it added: “Nonetheless, UK banks’ liquidity profiles are strong, so they are well placed to face the impact of an unfavourable scenario.” A vote to remain in the UK would be mildly positive for banks as funding rates could ease, supporting banks’ overall funding plans, Fitch said.
Huge rise in local government net borrowing
Local government net borrowing stood at £5.8bn in the financial year ending in March, according to the Office for National Statistics. This was an increase of £4bn on last year. The ONS said: “This increase was mainly due to decreases in grants received from central government (grants received are treated as negative expenditure), particularly in April, being partially offset by decreases in expenditure on goods and services.”
Housing association secures £40m funding
Pension Insurance Corporation, a specialist insurer of defined benefit pension funds, has invested £40m in secured debt issued by Kent-based housing association mhs homes. The funding, which matures in April 2050, will provide funding for more than 400 new homes in the Medway area of the county. In a statement, PIC said it has invested around £500m in social housing through bilateral deals to date.
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Inaugural FD’s Summit on housing and infrastructure development finance
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£1.4bn offered in New Homes Bonus grants
The government this week revealed that more than £1.4bn will handed to local authorities in New Homes Bonus grants. Under the scheme the government offers grants for each new home built in a local area. Figures released by DCLG show that Tower Hamlets appears to be the biggest winner with grants of £28.6m. The council is closely followed by Cornwall Unitary Authority with £19.5m. DCLG also revealed that housing completions had risen 12% year on year to 139,690.
AXA spurns £1.8bn of tobacco investments
Investment giant AXA group has decided to divest its tobacco industry assets, currently valued at around €1.8bn. The group said that it would also stop all new investments in tobacco industry corporate bonds and run off existing investments. Thomas Buberl, incoming chief executive of AXA, said: “This decision has a cost for us, but the case for divestment is clear: the human cost of tobacco is tragic; its economic cost is huge. As a major investor and a leading health insurer, the AXA Group wants to be part of the solution, and our hope is that others in our industry will do the same.”
Coastal cash up for grabs
Coastal councils have been urged to bid for a share of £90m in government funding. Grants of up to £4m are available through the second round of the Coastal Communities Fund, which has already distributed £120m. The Department for Communities and Local Government said that the cash has the potential to create an eight pound boost to coastal economies for every one point spent.
Rating boost for Nationwide
Ratings agency Fitch has revised Nationwide Building Society’s outlook from stable to positive. The society’s long and short-term issuer default ratings have been affirmed at ‘A’ and ‘F1’ respectively, and it’s viability rating at ‘a’. A statement from Fitch said: “The revision of the outlook to positive reflects Fitch’s expectation that Nationwide’s junior debt buffer will be increased sufficiently within the next 24 months to protect senior creditors on resolution to warrant a one-notch uplift of the Long-Term IDR above the VR.”
