Core Viewpoint - The UK is accelerating plans to create an alternative payment system to Visa and Mastercard due to concerns over potential disruptions from the US payments network under President Trump [1][4][5]. Group 1: Industry Response - Major UK banks, including Barclays, Natwest, Lloyds, Santander, and Nationwide, are collaborating to develop a new payment platform to handle the 50 billion payments made annually in the UK [2][6]. - The initiative is chaired by Vim Maru, head of Barclays UK, and aims to reduce reliance on US financial infrastructure [2][6]. Group 2: Economic Implications - The new payment system is intended to maintain economic stability in the event of US interference in the payments network, which could revert the UK to a cash-based economy reminiscent of the 1950s [3][4]. - Concerns have been raised about the potential weaponization of the payments system by the US, as evidenced by Trump's previous threats of tariffs against the UK and EU [5][6]. Group 3: Regulatory Framework - The UK Treasury had previously announced plans for a "next generation of UK retail payments infrastructure," with the Bank of England establishing a taskforce to oversee its development [6]. - The industry trade body, UK Finance, is coordinating the plans for the new payment system, referred to as DeliveryCo [6].

Group 1 - LSEG plans to develop an on-chain settlement service called the LSEG Digital Securities Depository to connect traditional and digital securities markets [1] - The service will facilitate trading and settlement of tokenized bonds, equities, and private market assets across multiple blockchain networks while remaining compatible with existing settlement platforms [1] - The first deliverable under this system is expected in 2026, pending regulatory approval [3] Group 2 - LSEG is under pressure from activist investor Elliott Management, which has acquired a stake in the company and is advocating for changes due to a more than 35% decline in the company's shares over the past year [2] - The company's stock has been affected by a broader selloff of global software stocks related to AI concerns, although it saw a slight increase of 0.9% on Thursday [2] Group 3 - Major British banks and financial institutions, including Barclays, Lloyds, NatWest Markets, Standard Chartered, and Brookfield, have expressed support for LSEG's initiative [4] - The initiative aims to create an ecosystem that allows participants to seamlessly transition between digital and traditional markets, accommodating various time zones and payment options [3]

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The UK real estate market has experienced significant fluctuations, with a recovery in second-hand home sales reaching 66% of pre-crisis peak levels and house prices recovering to 1.55 times the pre-crisis peak after 83 months [5][12][25] - The impact of policies such as quantitative easing (QE) and stamp duty adjustments has been significant, with the latter showing more pronounced effects on the real estate cycle [5][27] - Population dynamics, including high homeownership rates among local residents and the influx of new immigrants, have influenced housing demand, although immigration has not significantly impacted house prices [5][46][50] Summary by Sections Transaction Volume and Price Cycle Review - The UK housing market saw a decline in second-hand home sales by 64% and new home sales by 59% during the crisis period from 2007 to 2009 [12] - Currently, second-hand sales have recovered to 66% of their peak, while new home sales are at 45% of their peak [12] - House prices have increased to 1.55 times the pre-crisis peak, indicating a strong recovery [12][25] Policy Cycle Impact Review - The report highlights that the focus of policy responses during the 2007-2009 financial crisis was on stabilizing the banking system rather than directly stimulating housing transactions or prices [28] - Key measures included bank nationalization, emergency liquidity support, and the initiation of QE, which helped stabilize the housing market [28][29] Core Influencing Factors: Population Migration, Rent, and Mortgage Loans - The homeownership rate among UK-born residents is 67%, while EU-born residents have a lower homeownership rate of 35% [39][42] - New immigrants tend to rent initially, with homeownership rates increasing significantly after 20 years of residence in the UK [44] - Rental prices have shown a consistent upward trend, with recent yields recovering to 6.08% after a decline [50][62] Mortgage and Holding Costs - The average holding cost for properties is estimated to be between 1.0% and 2.5% of the property value annually [5][78] - The typical loan-to-value ratio for owner-occupied homes ranges from 75% to 90%, while investment properties usually do not exceed 75% [78] Price-to-Income Ratio and Monthly Payment Burden - The national price-to-income ratio was 4.9 in Q3 2025, with a peak of 5.8 in Q3 2022 and a low of 4.1 in Q1 2009 [73] - The monthly payment burden ratio was 33.8% in Q3 2025, with a peak of 46% in Q4 2007 and a low of 27.1% in Q3 2020 [77] Mortgage Loan Dynamics - The total amount of mortgage loans issued has seen a recovery post-crisis, with significant fluctuations in new loan commitments reflecting market sensitivity [80][83] - The pricing of mortgage loans has shifted from being risk-premium driven to being more influenced by policy interest rates [86]

Geopolitical Developments - The New START treaty between the U.S. and Russia is set to expire, marking the end of the last major nuclear arms control agreement, raising concerns about global strategic stability and the potential for an unconstrained nuclear arms race [2] - Iran has summoned all EU ambassadors in response to the EU's designation of its Revolutionary Guard as a terror group, while the Iranian Foreign Minister indicated a realistic approach in ongoing negotiations with the U.S. [3] Market Performance - Europe's Basic Resources Index fell sharply by 3.3%, indicating its largest daily drop in nearly ten months, affecting major companies like Glencore, which dropped by 4.1%, and Julius Baer, which fell by 1.9% [5] - Economic data from Europe showed mixed results, with Switzerland's Manufacturing PMI at 48.8, below expectations, while the Services PMI rose to 53.8, indicating expansion [6] Corporate News - Royal Caribbean Group received a target price increase from JP Morgan, moving from $368 to $371 [7] - Tesla saw a significant increase in new registrations in Sweden, up 26.4% year-over-year in January [7] - Lloyds had its rating cut to "Sell" from "Hold" by Shore Capital, although its target price was raised from 84p to 91p [7]

Lloyds expects to see a £100 million benefit from using AI this year as the bank continues investing heavily in technology https://t.co/5rEk5Dj6ec ...

Core Themes in Wealth Management - Private markets have transitioned from niche to mainstream, with increased allocations to private credit, infrastructure, and sustainable assets driven by the need for enhanced yield and portfolio diversification in a changing interest rate environment [1][4] - There is a growing alignment between capital and purpose, with clients seeking investments that offer attractive financial returns alongside measurable social and environmental impacts, particularly in sustainable infrastructure and affordable housing [2][4] Evolving Client Demands - Client demand is increasingly focused on private and alternative assets, with a strong appetite for private credit, infrastructure, sustainable assets, real estate, and direct lending opportunities, making private markets core components of investment portfolios [4] - Clients are emphasizing investments that deliver both financial returns and positive social or environmental outcomes, particularly in the context of the transition to a low-carbon economy [4] Key Lessons for the Industry - Access and alignment are becoming more critical than product volume, as clients seek direct access, transparency, and the ability to tailor investments to their objectives, moving away from generic fund exposure [3] - The traditional distribution model is evolving towards origination-led approaches, where expertise and execution capability are key differentiators for providers [3]

Group 1 - Lloyds share price has experienced a strong bull run this year, reaching its highest level since September 2008 [1] - The share price has increased by 430% over the last 12 consecutive months [1]

Group 1 - Lloyds share price reached 100p for the first time since September 2008, marking a significant milestone [1] - The share price has experienced a strong bull run, rising for seven consecutive months [1]

Core Viewpoint - Lloyds Bank is ending its small-business-focused invoice financing program, which is seen as detrimental to its smaller business clients, although the program was utilized by less than 1% of them [2]. Group 1: Program Closure - The factoring program will be closed by the end of the year, as reported by the Financial Times [2]. - The decision to shut down the service follows similar actions by other major banks [4]. Group 2: Impact on Small Businesses - The closure is perceived as a setback for smaller business clients, with some customers indicating that accessing the service had already become more difficult [2][4]. - Nathaniel Southworth, managing director of KAP Toys, noted that stricter revenue and profit criteria from lenders have excluded many small businesses from accessing factoring facilities [3]. Group 3: Industry Context - The factoring business is challenging to run profitably, particularly for small and medium-sized businesses (SMBs), which do not yield substantial profits for banks [5]. - SMBs are increasingly seeking alternative financing methods to compete with larger businesses, with a significant portion of retailers under $500 million in annual revenue prioritizing embedded finance innovations [6]. Group 4: Benefits of Embedded Finance - Embedded finance is seen as a leverage point for smaller retailers, with 68% of those using it reporting gains in operational efficiency [7]. - More than half of the retailers utilizing embedded finance believe it enhances customer journeys and reduces checkout friction, leading to higher conversion rates and improved access to customer data [7].

UK businesses ended 2025 feeling more upbeat about the economy’s prospects after they were spared much of the tax pain at last month’s budget, says Lloyds https://t.co/N1LBFZv7fz ...