A round-up of the main news stories this week. (Transcript Below).
Bank of England Holds Rates at 0.5%
The Bank of England has defied pressure from industry to leave interest rates unchanged at 0.5%. The steep fall in growth announced last week had led some to believe that the bank might consider cutting rates by a quarter or even half-point to zero. However, it seems set to monitor the performance of the new Funding for Lending scheme before implementing further measures.
HSBC Apologises for “Shameful Failures”
HSBC has apologised for what it described as “shameful failures”, and has set aside at least $2 billion to cover fines relating to money laundering accusations in the US and the mis-selling of PPI products in the UK. The bank’s chief executive Stuart Gulliver conceded that the full cost to the bank could be much higher. However, strong performance in the Asia-Pacific region has driven profits for the first half of the year above £8 billion.
RBS Could be Fully Nationalised
The Royal Bank of Scotland, also expecting heavy fines after an investigation opened into its role in the Libor rate-fixing scandal, could be fully nationalised by the government, as frustration grows over the reluctance of banks to lend to businesses and households. The bank received a bailout of £45 billion in 2008, and it is thought that it would take £5 billion more to buy up the rest of the bank. Ministers are said to be frustrated at schemes that have so far failed to boost lending, and would prefer a more hands-on approach that would come through a fully nationalised bank.
House Prices Falling Faster, Nationwide Reveals
Housing prices are falling at a faster rate, according to the Nationwide Building Society’s latest House Price Index. Average house prices fell by 0.7% in July from the previous month, and by 2.6% over the past year, the steepest annual rate of decline in 3 years. Nationwide’s Chief Economist, Robert Gardiner, described the trend as “unsurprising” given the retraction of the economy, but he believes that the rise in employment could spell better news for the market in the months ahead.
New Proposals for Savings Accounts
And finally, a week after a probe into packaged bank accounts was announced, the Treasury is now hoping to simplify savings accounts in order to restore the public faith in banks. Under the proposals, new savings products would have to abide by a set of regulations that would ban complicated small-print and inflated bonus rates that disguise very poor rates of return. Accounts that toe the line will be accredited by a “kitemark” that acts as an assurance of transparency and simplicity. The proposals could come into effect next year. In the meantime, Which4U’s guide on savings and bonus rates can show you how bonus rates work and how to manoeuvre around them.
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