Market report

Coventry buys Coop Bank | Alliance Trust mandate switch

Market close: London’s FTSE 100 suffered its worst week in three months. The index ended the day up 18.8 points, or 0.2%, at 7,895.85, but fell by 1.3% over the week, largely over geopolitical tensions and expectations that interest rate cuts will be delayed.

However, Sir Dave Ramsden, the Bank of England deputy governor, gave traders a positive message to take into the weekend after saying he was less concerned about inflation than he had been in previous months, signalling that he was open to interest rate cuts.

Coventry swoops on Coop Bank

Co-op bank

Coventry Building Society has agreed to acquire the Co-operative Bank in a deal worth up to £780m.

The society confirmed that it had reached an agreement on the key commercial terms with the bank’s owners.

It will add three million customers to the Coventry and make it the UK’s seventh largest lender with assets of around £89bn.

If approved by regulators the deal would mean the return of the bank under a mutual ownership structure, which it last had more than 10 years ago when it was part of the wider Co-op Group.

It left the group in 2017 when it fell into financial difficulties before being rescued by American hedge funds and is currently owned by a group of private equity investors.

Retail sales stall

UK retail sales stalled unexpectedly in March after shoppers scaled back spending on food and at department stores.

The volume of goods sold in stores and online was unchanged in March after a revised 0.1% gain the previous month, the Office for National Statistics said. Economists had expected a 0.3% increase.

The figures add to evidence of a lacklustre recovery from the end of year recession. However, consumer confidence rose to its highest level in two years in the last quarter, boosted by a sharp improvement in sentiment among younger people.

Deloitte’s consumer confidence index rose to a net balance of -11% in the first three months of this year, up from a balance of -11.4% in the previous quarter.

The rise reflects a sustained decline in the rate of inflation, easing the pressure on consumer finances after they were rocked by the cost of living crisis. It represents a sixth consecutive quarter of rising confidence.

Alliance Trust drops mandate manager

Alliance Trust, one of the biggest investment trusts in the UK, has dropped Jupiter Fund Management but will not be awarding its £300 million mandate to the fund manager whose defection triggered the change.

The trust said the decision to switch the global equities mandate was a result of Jupiter manager Ben Whitmore leaving to set up his own business.

However, it is not handing the mandate to Mr Whitmore’s new firm, and will award it to US boutique firm Arga Investment Management.

Willis Towers Watson, the consultancy that advises Alliance Trust, said it had a high regard for Whitmore’s stockpicking skills, but his change of circumstances had “introduced potential risks” that would take time to fully assess.

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