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Kwasi Kwarteng, the chancellor, has ruled out tearing up the regime put in place to segregate high street lenders’ investment banking arms that was put in place after the 2008 financial crisis.

Sky News has learnt that Mr Kwarteng told a gathering of industry chief executives this week that bank ring-fencing would not be scrapped or substantially diluted as part of a forthcoming overhaul of financial services regulation.

The chancellor’s disclosure during Thursday’s meeting will serve as a blow to industry hopes for a bonfire of regulation in an announcement pencilled in for later this month.

One City insider said the statement now looked “more like it will be ‘Big Bang 1.5’ rather than ‘Big Bang 2.0′”, a reference to the term given to the prospective package of reforms.

Following his controversial decision to scrap the Brussels-imposed cap on bankers’ bonuses, Mr Kwarteng is expected to announce significant changes to the Solvency-II framework governing the insurance industry, as well as other post-Brexit reforms.

Financial services executives have been canvassed by Treasury officials in recent weeks to submit ‘wish-lists’ for regulations that they believe are onerous and stand in the way of economic growth.

Critics say, however, that a regulatory approach which prioritises competitiveness over financial stability risks fomenting more crises across the sector.

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The decision not to scrap bank ring-fencing altogether implies that Mr Kwarteng has decided to implement the recommendations of a review published earlier this year by the Treasury.

The review, which was spearheaded by Keith Skeoch, the former Standard Life Aberdeen chief executive, suggested that the retail deposits threshold at which lenders become subject to ring-fencing should remain at £25bn.

He did, however, also say that some banks which exceed the £25bn threshold but which have negligible investment banking arms could be removed from the ring-fencing strictures.

The implementation of ring-fencing nearly a decade ago effectively created a firewall between lenders’ retail and investment banking operations, costing the industry billions of pounds.

Mr Kwarteng’s remarks on ring-fencing were not included in an official Treasury summary of the meeting with bank bosses.

Barclays, Lloyds Banking Group, Nationwide and TSB were all represented at the talks, where the dislocation in Britain’s mortgage market took centre stage.

Responding to an enquiry from Sky News, a Treasury spokesman said: “We welcome the comprehensive recommendations of the Skeoch Review into ring-fencing and proprietary trading rules which govern how banks invest and handle customer deposits.

“We will publish a response later this year.”

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Japan could be hours away from running out of Asahi

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Japan could be hours away from running out of Asahi

Japan could be hours away from running out of Asahi, the country’s most popular beer.

Dozens of factories nationwide have ground to a halt following a cyber attack on Monday.

The breach disabled the company’s ordering and delivery systems – and also took its call centre operations offline.

Supermarkets and Japanese pubs known as izakayas risk running super dry, with some retailers raising fears of potential panic buying.

Reuters file pic
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Reuters file pic

According to NHK, Asahi Group has now had to suspend plans to launch new products including soft drinks, coffee and throat lozenges.

One wholesaler expects to run out of beer kegs by Saturday at the latest, meaning they’ll no longer be able to supply booze to retailers.

They are now considering whether to start selling other brands as a temporary measure.

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Akira Kudo, who runs an izakaya in Tokyo, has been told that one of the two brands of Asahi he regularly purchases is now out of stock.

He’s now unable to predict when pints can be poured again.

“We have received beer from the wholesaler to replace Asahi, but we would like to avoid using other manufacturers if possible, so we will consider our options until the very last minute,” Akira added.

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Reuters file pic

A shortage may leave Japanese drinkers unimpressed. While there are other breweries in the country, Asahi has a fiercely loyal following.

Figures from Kirin Holdings suggest that the typical consumer drank 34.5 litres of beer a year in 2022, the equivalent of 54 large bottles.

Asahi executives are now consulting with the police and trying to determine whether the company has fallen victim to ransomware.

They have stressed that no personal information or customer data has been leaked.

Brewing operations outside of Japan – including in the UK – are also unaffected.

There have been a series of high-profile cyber attacks on well-known brands in recent months – including Marks and Spencer, the Co-op and Jaguar Land Rover (JLR).

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Jaguar Land Rover cyber attack: ‘We need certainty’ on aid, supplier pleads

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Jaguar Land Rover cyber attack: 'We need certainty' on aid, supplier pleads

A member of cyber attack-hit Jaguar Land Rover’s (JLR) supply chain has told Sky News the government must act to safeguard the sector as it has seen no financial relief to date.

Mike Beese, who owns Walsall-based Genex UK, was speaking as an industry body complained that support revealed by the government last week was failing to reach suppliers.

While unveiling a £1.5bn loan guarantee to JLR last Saturday, Business and Trade Secretary Peter Kyle said it would “help support the supply chain and protect skilled jobs in the West Midlands, Merseyside and throughout the UK.”

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Many interpreted the liquidity offer as a bailout, of sorts, that JLR would draw down on and distribute to ease pressure on direct and indirect suppliers.

Businesses affected by the production shutdown are now arguing they need the support they thought they were being promised by the Secretary of State.

It is unclear how Mr Kyle’s department and the chancellor saw the loan guarantee working in practice.

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JLR is understood to have not seen a need to draw on any such arrangement to date as its direct suppliers – the companies it deals with – have continued to be paid through existing funds.

It expects that money to trickle down to lower tiers of that supply chain.

The production shutdown has entered a second month and there is no visibility on when factories will get back to full speed.

Mr Beese said it was for this reason that the government had to intervene, potentially through a loan scheme for suppliers. “We need certainty”, he declared.

Pic: Genex UK
Image:
Pic: Genex UK

He said of his own customers: “We need that money to come in so we can pay our suppliers. “That money needs to cascade down the tiers,” he added [but] “it’s not going to be enough and you’ve got to make that up at some point.

Mr Breese, who employs 17 people and provides parts for several major JLR suppliers, said he attached no blame to JLR, which has been losing at least £50m a week since the attack in late August.

He also laid no fault at the door of the companies he supplied. “Only the government” could bring the relief the industry needed, he argued, while explaining that terms from lenders were out of reach given the scale of the uncertainty.

Commenting on the toll the crisis was taking, Mr Beese added: “It’s very stressful… people in the same boat are ringing me to be paid. “My staff all need certainty as well… these people aren’t just a number, they have families”, he said.

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Inside factory affected by Jaguar Land Rover shutdown

The president of the Confederation of British Metalforming (CBM), Stephen Morley, said: “We need to find a way to get money quickly to where it is needed most, to prevent the supply chain from completely collapsing and that could be an additional type of loan.

“JLR is rightly focused on getting payments through to their first-tier suppliers, and it’s best we allow them to complete that process.

“Our focus now must be on ensuring that second tier and smaller suppliers in the chain are supported, so the whole framework is in place when production restarts.”

JLR revealed earlier this week that it planned to resume limited production “in the coming days” as it continues efforts to restart key IT systems.

No firm date has sine been announced.

A spokesperson for JLR said: “As the controlled, phased restart of our operations continues, we are delivering solutions to support our suppliers through the period of disruption caused by the cyber incident.

“This includes establishing a supplier help desk with additional resources, putting in place a manual payment system to clear down outstanding invoices, and working to re-establish the automated supplier payment systems.

“We would like to thank everyone connected with JLR for their continued patience, understanding and support. We know there is much more to do but the foundational work of our recovery is firmly underway, and we will continue to provide updates as we progress.”

A spokesperson for the Department for Business and Trade said: “We acted swiftly to protect JLR, recognising the importance of the tens of thousands of people they employ directly and indirectly and to provide the company with liquidity at a key time.

“We continue to work with JLR and suppliers directly to understand the impact of the cyber attack – including on tier 2 and tier 3 suppliers – and how the support put in place is helping them.”

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Tesco promises ‘strong deals’ amid ‘intensive’ price war – as profits set to hit £3bn

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Tesco promises 'strong deals' amid 'intensive' price war - as profits set to hit £3bn

The UK’s most popular supermarket has said it is to introduce “strong deals” over the next three months as it prepares for Christmas.

It’s being done as Tesco chief executive Ken Murphy said he expected people to spread Christmas spending over a wider period to be more manageable and affordable.

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The supermarket price war, spurred by grocers competing to lower costs and win customers, “could be even more intensive” over the next months, Mr Murphy said.

Tesco, which is the UK’s number one supermarket by market share, has been successful in this fight, saying it was “continuing to win with customers”.

Defending higher profits

As a result, it said on Thursday that it expected annual profit to be higher than first thought, in the region of £2.9bn to £3.1bn.

It’s attracted criticism from the union Unite, whose general secretary Sharon Graham said Tesco “has profited from the cost-of-living crisis, making a fortune through unfairly inflating grocery prices”.

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Warning on food inflation ahead

But Tesco’s chief financial officer Imran Nawaz defended the company’s profits, saying its investment to bring costs down “worked better than we thought”.

“When you sell more, you make more.”

This was the biggest contributor to the higher profit outlook, he added.

‘Enough is enough’

A lot of the overall price rises in the UK, however, are due to policy measures, Mr Murphy said, referring to a new plastic packaging tax and higher employers’ national insurance contributions.

When asked what the chain hoped to see in the upcoming 26 November budget, Mr Murphy said he didn’t want it to be “harder for the industry to deliver great value for customers”.

After last year’s budget delivered “substantial additional operating costs”, he said, “enough is enough”.

The CEO said he had made “no decision” and “can’t speculate” on whether Tesco would close shops if its larger stores are not made exempt from paying business rates.

The company pays more than £700m a year in tax on premises, he added.

Consumer trends

The supermarket chain has also benefited from the trend it observed of people cooking at home and eating in more, it said.

There’s been an uptick in sales of fresh food and a “meaningful increase” in cooking from scratch.

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This could be a hangover from the COVID-19 era, maybe due to the growth of streaming services, or potentially a money-saving exercise, Mr Murphy said.

“It’s hard to put your finger on the single reason, but it’s definitely a trend”.

Similarly, Tesco’s luxury own-brand line continued to grow in popularity with double-digit sales growth for the third year in a row.

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