The Times - UK (2022-05-25)

40 Wednesday May 25 2022 | the times

Business

National Savings & Investments said
yesterday that it would hand out
£40 million more in Premium Bonds
prizes each month from June as it
boosted the returns on the savings
account.
The average interest rate paid on
the £117.8 billion held in Premium
Bonds at the start of this month will
increase from 1 per cent to 1.4 per
cent. The Treasury-backed bank said
that this would lead to 1.42 million
more prizes being awarded, ranging
from £25 payouts to two £1 million
jackpots. The odds of any £1 bond
winning any prize in the monthy
draw will fall from 34,500 to one to
24,500 to one.
The increase takes the average
return on Premium Bonds back to
where it was before NS&I cut the
prize fund rate to 1 per cent in Dec-
ember 2020. The bank reduced the
attractiveness of Premium Bonds,
along with heavy cuts to several other
savings accounts, to force savers’
money out of the bank because it ran
the risk of breaching its Treasury-
imposed fundraising target.
However, since the end of last

year it has been pushing up rates on

various accounts to keep up with

rising savings rates. The amount of

cash flowing into Premium Bonds

has slowed in recent months, with an

average of £1.5 billion being deposited

each month between May 2020 and

December 2021. The last time a

monthly draw had more than a bil-

lion new £1 bonds entered into it was

in August last year. This month the

number of bonds in the draw

increased by 600 million.

The latest data from the Bank of

Barclays has pushed ahead with a

plan to hand £1 billion of cash back to

investors after a blunder in the

United States forced the bank twice

to delay the capital return.

The lender had announced a share

buyback in February, only to post-

pone the cash return the following

month when it discovered a multi-

billion-dollar error at its American

structured products business.

The scheme was delayed a second

time last month while Barclays held

talks with US regulators about re-

stating last year’s accounts to reflect

the impact of the mistake.

However, Barclays said yesterday

Barclays finally launches £1bn buyback

that it had finally launched the

buyback, cheering investors who

pushed its shares up 5p, or 3.2 per

cent, to 162¾p. It came after the bank

revealed on Monday evening that it

had refiled its accounts in America.

The start of the buyback and the

accounts restatement will help Bar-

clays to move beyond the debacle,

which has marred the beginning of

Coimbatore Sundararajan Venkata-

krishnan’s tenure as chief executive of

the bank. The Barclays boss, who is

known as Venkat, took charge of the

lender last November when Jes

Staley stood down amid the fallout

from the Jeffrey Epstein scandal.

Barclays shocked the City when it

said its structured products business

had issued about $15 billion more

securities than it had permission for

from US regulators. The bank is

investigating how the error, which

Venkat, 56, has described as “entirely

avoidable”, occurred. It said on

Monday evening that its restated

accounts included the disclosure of

“one material weakness” in its inter-

nal controls over “the identification

of external regulatory limits related

to securities issuance and monitoring

against these limits”.

It has taken a £540 million pro-

vision to account for the cost of

rectifying the error, but has said that

the final bill for buying back the

accidentally issued securities would

depend on market movements.

Ben Martin Banking Editor

The accounting regulator has hit

KPMG with another fine, this time of

£4.5 million for “serious failures” in its

audit of the 2010 accounts of Rolls-

Royce, the aircraft engine maker that

five years ago paid a large penalty to

settle allegations of corruption.

It is the fourth heavy fine that

KPMG has received from the Finan-

cial Reporting Council this year,

having already been penalised for its

audits of Conviviality, the Bargain

Booze owner, and Revolution Bars,

the hospitality group. This month it

was found to have misled regulators

during a routine inspection of its

audits of Carillion, the collapsed con-

struction contractor.

KPMG had been Rolls’s auditor

since 1990, but lost the job soon after

the settlement in 2017 of bribery and

corruption claims against the engi-

neer that spanned five continents and

three decades. Those settlements

with the Serious Fraud Office and the

US Department of Justice cost the

company a total £670 million in fines.

The FRC was particularly con-

cerned with two payments, totalling

just over £5 million, that Rolls had

made to an agent in India. Given

“prominent” allegations of bribery in

the sector at that time, including at

another of KPMG’s audit clients, the

regulator said the payments — and

the discussions that the auditors had

New fine on KPMG’s roll of shame

with management about them —

should have at least been flagged in

their final report. But KPMG had

“wrongly decided that... Rolls could

not have infringed laws or regula-

tions” and left out any mention of the

payments. The FRC criticised the

auditors for failing to exercise a “suffi-

cient degree of professional scepti-

cism as to the information they were

given by their client”.

It accepted the breaches were not

“dishonest, deliberate or reckless”

and they did not lead to the accounts

being “materially mis-stated”. But

they were still “serious”.

The £4.5 million fine was reduced

to £3.4 million, reflecting KPMG’s

admission that its work had not been

up to scratch. A £150,000 fine for

Anthony Sykes, who led the Rolls

audit team, was cut to £112,500.

Jon Holt, chief executive of KPMG

UK, said he was “sorry that ele-

ments of our work... did not meet

the professional standards required”.

Tom Howard

KPMG was fined £4.5 million for its

failures in an audit of Rolls-Royce

Feeling lucky? Bonds prize fund boosted

George Nixon Money Reporter

The first £1,000 Premium Bonds winner is announced at the Selfridges department store in central London in December 1958

EDWARD MILLER/KEYSTONE/HULTON ARCHIVE/GETTY IMAGES

England found that NS&I raised a net

£2.6 million in the first three months

of this year. It has a fundraising target

of £6 billion for 2022-23.

Premium Bonds have become less

attractive in recent months because

savers have less money to put away

since the end of coronavirus travel

restrictions and because of the soar-

ing cost of living, as well as rising

savings rates elsewhere.

At present Premium Bonds have

an effective rate of return of 1 per

cent, but there is no guarantee you

will win anything.

There are 17 easy-access savings

accounts that pay 1.1 per cent interest

or more, according to The Savings

Guru, the comparison site , with up to

1.5 per cent available from Chase,

JP Morgan’s smartphone bank.

Anna Bowes, co-founder of

Savings Champion, an independent

analyst of cash-based savings, said:

“With interest rates rising on savings

accounts elsewhere, Premium Bonds

customers who were disappointed at

the reduction in the number of prizes

available after the prize draw interest

rate fell to 1 per cent in December

2020 may have started looking else-

where — perhaps prompting NS&I

into action.

“By raising the prize fund rate back

to where it was between December

2017 and December 2020, and there-

fore increasing the chances of win-

ning a prize each month, those who

were on the fence may be tempted to

stay, at least for the time being.”