Global economy to outperform expectations in 2024 - Goldman Sachs

Goldman Sachs Research expects the global economy to outperform again in 2024. That outlook is based on its economists’ prediction for income growth (amid cooling inflation and a robust job market), their expectation that rate hikes have already delivered their biggest hits to GDP growth, and their view that manufacturing will recover. 

Meanwhile, central banks will have room to reduce interest rates if they're concerned about the economy slowing. 

“This is an important insurance policy against a recession,” Goldman Sachs Research Chief Economist Jan Hatzius writes in the team's report.

Worldwide GDP is forecast to expand 2.6% next year on an annual average basis, compared with the 2.1% consensus forecast of economists surveyed by Bloomberg. In fact, Goldman Sachs Research's forecasts for GDP growth in 2024 are more optimistic than the consensus for eight of the world's nine largest economies, as of 8 November 2023. And notably, the financial institution’s economists expect US growth to outpace its developed market peers again.

 

J.P. Morgan launches programmable payments 

Onyx by J.P. Morgan has launched programmable payments as a feature for blockchain-based accounts on the JPM Coin System. This will allow users to program payments for the first time using an intuitive interface. Siemens AG executed its first payment using the programmable payments functionality on 6 November. FedEx and Cargill plan to go live in the coming weeks. Payments have long been limited by the type of “rules” and “conditions” that could be executed on them. Standing orders, for example, used to be the most ubiquitous type of rule available. Programmable Payments lets firms “program” a more expansive set of rules on JPM Coin accounts and blockchain distributed accounts (BDAs).

Programmable Payments uses a new portal on JPM ACCESS, J.P. Morgan Payments’ online treasury portal. The programmability is designed to allow clients to place rules on their payments in a DIY manner, with a level of control not currently available for payments. 

One use case for programmable payments is dynamic funding, allowing clients to specify a range of rules for dynamically funding a bank account in case of shortfalls. Event-based payouts are another use case. Here, clients can execute payments based on events like margin calls, delivery of assets/goods, and fulfilment of contractual obligations.

The bank says this feature helps clients to respond dynamically to events, which is ever more critical as 24x7 payment infrastructure proliferates, and responding to volatility becomes vital.

 

Report: high street banks reduce appetite to fund SMEs

Over eight in ten SME finance experts (83%) believe that high street banks are reducing their appetite to fund the UK’s 5.5 million small and medium-sized businesses, according to iwoca’s latest Q3 2023 SME Expert Index.

The analysis shows that the drop in lending is set to worsen, with three-quarters of brokers (75%) predicting that high street banks will continue to reduce their access to working capital over the next twelve months. Eight in ten brokers (82%) also predict that SME demand for capital will rise in the next six months, widening the financing gap business owners are already experiencing.

As traditional routes for small business financing reduce and cannot meet the needs of SMEs, more than half of brokers (51%) report a negative view of high street banks. The data from iwoca reveals that this is the fourth consecutive quarter where more than eight in ten brokers have warned that the major banks have reduced their support to the UK’s small businesses. 

Data from brokers comes as the Office for National Statistics revealed that inflation remains stubborn at 6.7% in the year leading up to September. Three in five SME financing experts (61%) say that SME loan demand has been driven by the need to manage cash flow rather than fund company growth – up a quarter in just three months. The research shows that six in ten (58%) believe the Prime Minister won’t meet his target to halve inflation by the end of the year. 

 

UniCredit issues green senior preferred bond for €750m

UniCredit S.p.A. has successfully issued a fix-to-floater senior preferred green bond for €750m with 6.25 years maturity and a call after 5.25 years, targeted to institutional investors. The issuance follows a book-building process that gathered more than €2bn demand from more than 150 institutional investors globally. The initial guidance of 180 basis points (bps) over the mid-swap rate has been revised downwards and set at 150 bps, resulting in a fixed coupon of 4.60% paid annually, with an issue/re-offer price of 99.887%.

The final allocation has been mainly in favour of funds 68%, banks and private banks 25%, and insurances 6%. Overall, 79% of the bonds were placed with investors with an ESG/SRI/Green focus. The demand came from the following main regions: France 29%, Italy 29%, UK 12%, Germany/Austria 10%, Iberia 10%, Switzerland 6%, and BeNeLux 3%.

The issuance took place under the bank’s sustainability bond framework, published in 2021 and aligned with the Green and Social Bond Principles and the Sustainability Bond Guidelines of the International Capital Market Association. Annual reporting will ensure the transparent allocation and tracking of proceeds also in terms of impact achieved.

Proceeds are earmarked to fund eligible projects in renewable energy, clean transportation, and green buildings as outlined in our Framework. The green bond aims to support the United Nations Sustainable Development Goals (UN SDGs) number 7 (Affordable & Clean Energy), number 9 (Industry, Innovation & Infrastructure) and number 11 (Sustainable Cities & Communities).

 

Urgent warning issued over rising threat of crypto scams

A growing number of British investors risk being defrauded by a wave of fake adverts posted on social media, according to a warning issued by Lloyds Bank. The number of cryptocurrency investment scams reported by victims this year has risen by 23% compared to the same period in 2022.

The average amount lost by each victim of a crypto investment scam is £10,741 (up from £7,010 last year). This is more than any other type of consumer fraud (such as romance scams or purchase scams). The analysis found that 66% of all investment scams start on social media, with Instagram and Facebook the most common sources. This includes bogus ads, fake celebrity endorsements, and targeting through direct messages.

Would-be crypto investors typically make an average of three payments before they realise they have been scammed, taking around 100 days from the date of the first transaction before they report it to their bank. By this point, the money is usually long gone and impossible for the bank to reclaim. Revolut is the most common recipient of Faster Payments made by crypto investment scam victims at Lloyds Banking Group (though is not always the end destination of the funds, which may then be sent on elsewhere). The bank states it is essential to remember that cryptocurrency payments can also form part of other types of scams, such as romance scams or impersonation scams. If someone asks for a cryptocurrency payment, that should immediately set alarm bells ringing.

“Investing can be a great way to make money, but you need to make sure your money is going to a trusted, genuine company,” said Liz Ziegler, Fraud Prevention Director, Lloyds Bank. “Crypto is a highly risky asset class and remains largely unregulated, which makes it an attractive area for fraudsters to exploit. If something goes wrong, you’re unlikely to get your money back.”

 

OakNorth unveils business banking offering

Neobank OakNorth has launched a business banking offering aimed at helping mid-sized businesses (revenue of £1m-£100m) that it says are currently overlooked and underserved in the UK’s current financial landscape.

To date, OakNorth says it has lent over £10bn, directly contributing to creating more than 40,000 new jobs and 29,000 new homes across the UK. Its customers include brands such as Deliciously Ella, Ottolenghi, Z Hotels, Third Space, and The Heartwood Collection, and it supports businesses across a variety of sectors from healthcare and specialist education, to hospitality and leisure, and SME housebuilding.

One of the core elements that defines OakNorth’s approach to lending is how it looks at the business world – rather than using broad assumptions to split the economy into a dozen or so sectors, it uses an analytical framework powered by vast commercial loan data, covering over 270 industries. This is designed to allow it to take a detailed, data-driven, and forward-thinking approach to serving a range of different sectors and subsectors that other lenders often retract from.

OakNorth is taking the same approach when it comes to its new everyday business banking offering. Rather than overwhelming businesses with a menu of products and features – many of which may be irrelevant to the business in question, the neobank says it is taking them on the journey, directly working alongside founders, CFOs, CEOs, and directors in a phased Beta launch. Cross-functional teams are prioritising the real-life insight and data needed to make something with lasting value, not another option in a sea of apps.