BUSINESS LIVE: Barclays to buy Tesco Bank; Bellway completions to slump 31%; Howden’s £1.1bn war chest

The FTSE 100 is up 0.1 per cent in early trading. Among the companies with reports and trading updates today are Barclays, Tesco, Bellway and S&U. Read the Friday 9 February Business Live blog below.

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Why the spring budget could be make or break for UK housebuilders

British housebuilders have suffered in the past year in challenging market conditions, but the tide may finally be turning for the sector.

New home completions, profits and share prices have slumped across much of the industry, as a tough comparison with two strong prior years is compounded by a frail British consumer.

Gucci owner Kering vows to pump more money into the luxury brand

French luxury group Kering has vowed to pour more money into Gucci to revive its star label after another slump in sales.

As clouds hang over the industry, it said revenues in the three months to the end of December were 6 per cent lower than a year earlier, at £4.2billion.

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Howden readies £1.1bn growth war chest

Howden, one of the world’s largest privately owned insurance brokers, has readied a £1.1billion war chest to finance its growth ambitions, according to Reuters.

its plans include acquisitions and the group has had interest from potential new shareholders to back a large deal if needed, its management told the news agency.

The British group this week reported a 30 per cent jump in core earnings to £780million in the year to 30 September 30, partly driven by acquisitions. It also raised $6.1 billion in debt to refinance existing borrowings and raise cash.

After the refinancing, Howden has £1.1billion of cash on its balance sheet to spend on deals, hires and buying out employee shareholders, CFO Mark Craig said.

Sondrel doubles in value amid links to Elon Musk’s brain chip

The value of Aim-listed Sondrel more than doubled following reports it played a key part in Elon Musk’s Neuralink brain chip.

Shares in the Berkshire firm soared 105.9 per cent, or 6.3p, to 12.25p, adding over £5million to its £5million market cap, after Mail Online revealed Sondrel assisted with semiconductor technology that allows Neuralink’s implants to function.

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Bellway burns through cash reserves

Oli Creasey, property research analyst at Quilter Cheviot:

‘Of some concern for investors will be that during this six month period, Bellway has spent two-thirds of its cash reserves, with the cash on balance sheet reducing from £232m to just £77m.

‘This appears to be a result of increased payments to land creditors (mostly representing contracts signed in the past two years), but the future land obligations have reduced significantly, and net gearing (which includes the impact of future land payments) remains low at c. 5%.

‘While we expect management will want to rebuild this cash buffer over future periods, the reduction isn’t as alarming as the headline reduction suggests.’

Bellway completions to slump 31%

Bellway cheered easing affordability concerns and improved booking rates in the first half of its fiscal year, buoyed by recent cuts in home-loan rates.

The British housing market has seen signs of stability in recent weeks helped by easing mortgage rates, after battling subdued demand for most of last year, while builders have stayed cautious amid macro-economic worries and lack of clarity over the Bank of England’s monetary policy path.

Reflecting the green shoots of recovery in the sector, UK house prices rose more than expected in January, while British lenders in December approved the most number of mortgages since June.

‘While the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates through the first half has eased affordability constraints,’ CEO Jason Honeyman said in a statement.

Bellway expects to complete 7,500 homes this year, down more than 30 per cent from the 10,945 built in the year to 31 July 2023.

Disney buys rights to Taylor Swift’s Eras Tour in bid to boost its subscription service

Disney hopes to cash in on Taylor Swift mania to boost its subscription service.

It has bought exclusive streaming rights to the pop superstar’s Eras Tour concert film.

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Barclays to buy Tesco Bank

Barclays is set to buy Tesco’s retail banking operations in a deal worth up to £700million, kickstarting a 10-year ‘exclusive strategic partnership’ that will see the lender market and distribute credit cards, unsecured personal loans and deposits using the Tesco brand.

Barclays boss C.S. Venkatakrishnan said: ‘This strategic relationship with the UK’s largest retailer will help create new distribution channels for our unsecured lending and deposit businesses.

‘We are able to bring our expertise in partnership cards developed over decades in the US to enhance further the highly successful Tesco Clubcard loyalty scheme.

‘Similar to our acquisition of Kensington Mortgages last year, this partnership with Tesco is a further demonstration of the investment we continue to make in our UK consumer business.

‘We are looking forward to working closely with the team at Tesco over the coming months to enable a smooth transition and, subject to completion of the transaction, we look forward to welcoming Tesco Bank colleagues and customers to Barclays.’

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