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European Central Bank President Christine Lagarde has called on European lawmakers to expedite the legislation necessary for the launch of a digital euro. Speaking to the European Parliament, she stressed that a "legislative framework to pave the way for the potential introduction of a digital euro should be put in place rapidly." The ECB has been developing the digital currency, which would serve as an online wallet for euro area residents, but progress has stalled due to legislative hurdles. It sees the digital euro as a response to U.S. President Donald Trump's push to promote stablecoins, a type of cryptocurrency typically pegged to the dollar, which Lagarde has said poses "risks for monetary policy and financial stability" because they could lure deposits away from banks and don't always maintain their fixed value.

 

Reuters

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The US Federal Reserve is directing its supervisors to no longer consider "reputational risk" - defined as the potential for negative publicity to hurt a bank's business or lead to costly litigation - when examining banks. The Fed said it was removing references to that risk in documents, and will instead direct examiners to focus on specific financial risks. Banks had complained that policing of reputational risk can lead to examiners traducing banks for matters that may be legal and not financially risky, and can precipitate subjective judgments by supervisors about what bank activities are suitable. The Fed said that it still expects banks to have robust risk management.

 

Reuters

Following the recent cyber attack, Marks & Spencer experienced a 20% decline in clothing sales during the four weeks leading to 25 May compared to the same period last year. The attack forced M&S to halt online orders for nearly seven weeks, impacting sales which had previously surged by 11.5% in the preceding three months. Despite the setback, M&S reported strong in-store performance, particularly in womenswear, allowing it to maintain its status as the UK's largest clothing retailer by value. James Grzinic, a retail analyst at Jefferies, noted that M&S's rivals, including Next, Zara, and H&M, capitalised on the disruption, with Zara's sales growth soaring to 27.8% and H&M's to 18.1%.

 

The Guardian

The UK's Financial Conduct Authority (FCA) has reported a record number of whistleblowing disclosures, with 1,131 reports received in the last financial year, marking an 8% increase from five years ago. The FCA acted on 908 cases, resulting in regulatory action for over half of them. Steve Smart, joint executive director for enforcement and market oversight, commented: "We're receiving more whistleblowing reports than ever, and they're making a real impact." The FCA has improved its response time, with 46% of reports reviewed and closed within a year, up from 19% the previous year. The annual "prescribed persons" report highlights the FCA's commitment to addressing sensitive information and enhancing its regulatory effectiveness.

 

The Times

The $3.7bn (£2.9bn) merger between Getty Images and Shutterstock is under the scrutiny of the UK's Competition and Markets Authority (CMA). Announced in January, the deal could monopolise the stock image market, affecting the creative, media, and advertising sectors. Getty Images anticipates annual cost synergies of $150m (£199m) to $200m (£159m) within three years. The CMA is currently assessing whether the merger could substantially lessen competition in the UK market; a formal investigation is yet to be launched. If approved, the merger is expected to close in the second half of 2025.

 

City AM

The Financial Reporting Council has fined KPMG £1.25m - discounted by 15% due to its cooperation - over the firm’s work for Carr’s. The FRC said KPMG and audit engagement partner Nick Plumb should not have signed Carr’s audit report, as they were placing reliance on the work of another firm, whose audit engagement partner had held the role for longer than five years while the firm had also provided some non-audit services to the associate entity. Jamie Symington, FRC deputy executive counsel, commented: "In this case, while the quality of the audit work performed by the two firms is not brought into question, the breaches were serious. KPMG and Plumb missed a number of opportunities in FY21 to establish the facts underpinning the breaches . . . The respondents’ failings in this regard were of a basic and fundamental nature." Nick Plumb was also fined £38,675 after a 15% discount.

 

Consultancy.UK

TSB, the British high street bank owned by Banco Sabadell, may be on the verge of another ownership change as speculation mounts over potential suitors. Following a series of consolidations in the UK banking sector, including Nationwide's £2.9bn acquisition of Virgin Money UK, TSB's modest market share of 2% in mortgages has drawn interest. RBC analyst Benjamin Toms suggested that NatWest could be the "most likely acquirer" of TSB, estimating its value at around £2.6bn. However, NatWest's CEO Paul Thwaite indicated that a bid is unlikely, saying that "adding a couple of percentage points to market share is not an existential issue." Other contenders include HSBC and Barclays, with Yorkshire Building Society also reportedly considering a bid.

 

The Times

BBVA is weighing the withdrawal of its €14bn (£12.2bn) offer for Sabadell if the Spanish government imposes stringent conditions or if the sale of Sabadell's British unit, TSB, occurs. Chairman Carlos Torres said: "If conditions are imposed on us that we do not consider appropriate, we have the option to withdraw." The Spanish government is expected to announce its decision soon, which will influence BBVA's formal bid. Torres confirmed that BBVA does not intend to alter the current terms of its offer, and any extraordinary dividend from Sabadell would necessitate an adjustment.

 

Reuters

Andrea Orcel, the CEO of UniCredit, indicated in an interview with La Repubblica on Friday that the bank might withdraw its offer for Banco BPM due to challenges posed by the Italian government. He also mentioned that UniCredit has set aside capital for potential losses from its Russian assets. Additionally, UniCredit has bought out its life insurance partners in Italy, taking full control of its local joint ventures with CNP Assurances and Allianz.

 

Reuters

Paul Thwaite, the new chief executive of NatWest, has moved away from the "purpose-led" strategy of his predecessor, Dame Alison Rose, following the controversy surrounding the closure of Reform UK leader Nigel Farage's Coutts account. The incident raised questions about freedom of speech and led to Rose's departure. In the bank's latest annual report, the term "purpose" appeared only 125 times, a drop from 262 instances in the previous report. In an interview with the Times, Thwaite stressed a shift towards a customer-centric approach, adding that while the bank is refocusing, it remains committed to ESG policies, saying: "We're still one of the biggest banks for sustainable finance."

 

The Times

According to Lubbock Fine, Britain has lost its competitive edge over European nations due to soaring corporate tax rates. HM Revenue and Customs reported that businesses paid £91.5bn in corporation tax in the year leading up to May, marking a 5% increase from the previous year and more than double the £43bn paid a decade ago. The firm warns that this escalating tax burden "threatens the UK's ability to attract foreign investment as companies look towards countries with more favourable tax regimes."

 

Daily Mail

Airbnb is under scrutiny as human rights organisations urge the UK's National Crime Agency (NCA) to investigate the company for alleged money laundering linked to illegal Israeli settlements. A complaint filed by the Global Legal Action Network (GLAN) and Al-Haq claims that Airbnb has violated UK anti-money laundering laws by listing over 300 holiday rentals in the settlements, which are deemed illegal under international law. Ashish Prashar, a special advisor to GLAN, said: "By bringing this case against Airbnb, what we're saying is that no one, no business, no company, no entity, should make profits from war crimes." Despite previous commitments to remove such listings, Airbnb continues to operate in these areas.

 

Daily Mail

Sir Michael Eavis, the 89-year-old owner of the Glastonbury festival, has transferred most of his financial interests to his daughter, Emily, and a family trust, potentially saving nearly £80m in inheritance tax. The operational company, Glastonbury Festival Events Ltd, saw pre-tax profits double to nearly £6m last year, with revenues reaching £68m. Eavis's actions follow recent announcements by Chancellor Rachel Reeves regarding inheritance tax changes affecting family businesses.

 

The Times