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REGIONAL MARKET COMMENTARY, Q1 2020

• Article by BRUIN Financial

REGIONAL MARKET COMMENTARY, Q1 2020

ROLE PROFILES

Operations

It is safe to say that this last quarter ended very differently across all industries to how it started! COVID-19 has had devastating effects both on an economical level but also on a human level and the after effects will be seen for many months to come. For the most part the North West continued to see growth in investment throughout January and February which was welcomed.

 

Global investment bank GCA Corporation, which includes Manchester-based GCA Altium, completed the acquisition of Stella EOC, a leading technology and media investment banking boutique with coverage in the Nordics, the UK and continental Europe. With this deal, GCA is expanding its coverage into further key strategic markets including Benelux and the Nordics, strengthening its already leading technology practice and adding expertise in the media and global entertainment space. GCA now employs more than 500 staff, 400 of whom are bankers, and operates across 25 locations in 14 countries.

 

Redwood Bank based in Warrington has supported growth in the Northern Powerhouse by lending £63m providing vital support to Warrington and the North West over the past two-and-a-half years. Business continues to boom for the Redwood Bank Warrington office, which has more than doubled the size of its premises in recent months, as well as making two high-profile staff appointments.

 

Manchester-based Assetz Capital, one of the UK’s most impactful business lenders, has surpassed the £1bn mark for lending to SMEs and housebuilders across the UK, with more than £350m being deployed in the North since 2013. As part of its business lending, Assetz Capital has been a key supporter of the UK housing market, funding a total of 4,846 new homes since its inception. In fact, In the North alone, Assetz Capital has funded more than 340 SMEs, as well as the construction of in excess of 2,000 new homes. In September 2019, the company was placed 53rd on The Sunday Times’ Tech Track 100 league table for the second consecutive year, having achieved an annual sales rise of 85.77% over three years.

 

Praetura Ventures, the Manchester-based investor that backs early-stage businesses in high-value sectors, has successfully closed its second EIS fund at £7m in a move that brings the total raised by the firm to £22m in less than 12 months.

The £7m Praetura EIS 2020 Fund will enable the firm to continue to support the growth ambitions of high-quality scale-up businesses across the region and will now be deployed alongside the strategic support and guidance of the 25-strong team at Praetura Ventures.

 

Equilibrium Asset Management has hit £1bn in assets under management (AUM), as it remains firmly on track to reach its target of £4bn AUM by 2028. The milestone has been achieved exclusively through organic growth and comes off the back of record turnover last year, almost 25 years since Wilmslow-based Equilibrium was founded by Colin Lawson.

 

Across in Liverpool, private wealth manager Rathbone Brothers has seen its total funds under management and administration (FUMA) rise by 14.3% to £50.4bn. Rathbones said its FUMA comprised £43bn in the investment management business, up 11.7% from £38.5bn at December 31, 2018, and £7.4bn in the unit trusts business, up 32.1% from £5.6bn. This is very positive news coming out of local businesses across the North West and will stand us all in good stead once COVID-19 passes (hopefully sooner rather than later) and things start getting back to BAU.

 

Technology

Technology continues to grow within the Financial Services sector in the North West with depends for Developers continuing to grow. Technology is continuing to grow within Fintech, Asset Management, Banks and Insurers as businesses are heavily investing in new technologies and growing technical teams.

 

Manchester continues to be hailed as the UK’s undisputed tech capital outside of London with Lancashire, Liverpool and Cheshire quickly growing within the sector. Recent reports show that considerate growth is still taking place within tech heavyweights such as AO World, UKFast and The Hut Group alongside smaller established tech firms like Accesspay, Radius Payment Solutions and Matillion.

 

A recent report shows that within the UK, Technology investment has soared by 44% to over £10 billion – more than France and Germany combined. The UK is currently second in the world for Fintech with investment rising by over 100% since last year alone. From this we are continuing to see a high demand for C#/.NET and Java Developers to meet the requirements of our clients across the North West. The continued demand for Developers has been consistent throughout our Investment Banking, Asset Management and Insurance clients.

 

Financial Services experience has recently been a requirement from our clients, however due to the shortage of Developers in Manchester, we have noticed that more businesses are now considering Developers outside of Financial Services and focusing more on their technical skills.

 

Women in Tech is still very high on the agenda across all sectors, from start-ups to global corporates. Women in Tech is a high priority as the gender pay gap and gender diversity gain prominence across the UK and current stats show that only 15% of tech professionals are Women. Changes to job adverts have seen an increase in female applications, with Vodafone being an encouraging example to how that this has worked. Tech companies are using several strategies to boost their appeal to women such as training staff in unconscious bias awareness, deleting genders from CVs, insisting that shortlists include women, introducing retraining programmes for returners and showcasing female role models on social media. Changing job adverts is a small but effective part of the push to change the industry’s gender balance.

 

Risk & Compliance

Operational Risk functions and BCP teams have been called on in this time of uncertainty to pave the way for a lot of financial services organisations. As the crisis deepens with the outbreak of Covid-19 the sector has been busy instigating their plans which can vary depending on the size of organisations. Home-working has been instrumental in helping business continue as normal as the market adjusts to the current climate. The technology and support seems to be where it needs to be for organisations but factor in the added risk of unexpected remote working other issues can surface. Most organisations will have planned for this whether it is in-house or through a third party provider but ongoing work is needed to ensure the supply chain functions remain secure.

 

In the recruitment world of compliance and risk there has been little let up in the requirements from Financial Services organisations with the regulating authorities remaining vigilant. Although reporting changes to IR35 have been deferred to next year by the government, March had seen a number of contractors finish off such work with the alternative converting to permanent and the rest seeking new employment. There has been saturation in certain skillsets across AML/KYC in regional locations and less jobs available as many remediation projects have come to a head.

 

Whilst it is impossible to speculate across the financial services industry on how the contract market will change in the coming months amidst the uncertainty there could be opportunity in the market for the flexible workforce.

 

Overall there is going to be a pause as organisations assess the impact of Covid-19 and whether we are heading for a recession. Risk and Compliance will remain high on the agenda for SMEs through to global banking organisations and is unlikely to be perturbed in the long-term.

 

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